IFA Newsletter November 2025

We have recently received several new DB transfer referrals from IFAs who have not submitted a case for some time. A few have asked whether they need to provide an updated due-diligence form or reapply for an agency with us. The answer is no – as long as your FCA status and contact details remain unchanged, no further action is required.  So, if you have any new cases just get in touch.

While recent economic conditions have resulted in an almost universal reduction in CETVs, typically around 40%, it is notable that Local Government Pension Schemes (LGPS) have largely bucked this trend. In fact, in most cases, LGPS continues to offer comparatively generous CETVs.

An analysis of 59 LGPS CETVs calculated this year shows an average Critical Yield of 4.4%, with an average Transfer Value Comparator (TVC) of 86.5% of the CETV. This indicates that, in many instances, clients could secure a pension comparable to the scheme benefits but with greater flexible in shaping the income to suit client circumstances. Where health issues are present, the potential to obtain an even higher pension is likely.

This trend is reflected in our advice outcomes for LGPS members, where we are more likely to recommend an LGPS transfer (compared to non-LGPS) at Full Advice stage.

It is therefore clear that if you have a client with an LGPS approaching or at retirement, it is imperative that they consider the transfer option before taking the scheme benefits.

As anticipated by many – including in our June newsletter – the Monetary Policy Committee (MPC) voted by a narrow majority of 5–4 to cut the Bank Rate by 0.25 percentage points, bringing it down from 4.25% to 4.0%. This decision comes despite inflation remaining well above the 2% target and reflects concerns about the pace of economic growth. Bank Rate reduced to 4% – August 2025 | Bank of England.

Nevertheless, with inflation proving ‘sticky’ and government borrowing at record levels, we’ve yet to see any meaningful decline in gilt yields or a corresponding rise in average transfer values. And with few expecting a major shift in the broader economic outlook, significant changes on these fronts seem unlikely in the near term.

With inflation remaining stubbornly high and serious concerns about the lack of economic growth, it was no surprise that the Bank of England decided to maintain interest rates at 4% – Interest rates and Bank Rate: our latest decision | Bank of England

Scottish Widows has published its latest Women and Retirement Report 2025 – Lloyds Banking Group plc and the headline reveals a modest increase in the gender pensions gap, which has risen to 32%.

For individuals with Defined Benefit (DB) pensions, the disparity is slightly smaller. An analysis conducted by Grove of 2,748 Defined Benefit scheme members found that the average annual gross pension for men is £12,526, compared with £9,456 for women – a 24.5% difference. This reduction, relative to the broader gender pensions gap, aligns with the narrowing of the gender pay gap, which, according to the ONS, decreased to 7.7% in April 2023. It may also reflect the remuneration characteristics of larger employers that historically offered DB pension schemes.

Another key contributor is the difference in attitudes toward investment risk. Grove’s research indicates that women are more likely to adopt a ‘Cautious’ investment profile, whereas men are more than twice as likely to have an ‘Adventurous’ risk appetite, even in the years leading up to retirement.

For those in the accumulation stages in particular, this tendency towards a more cautious approach can have significant longer-term implications on potential investment growth. However, with women as likely as men to seek financial advice, challenging pre-conceived notions of risk and the downside of a more cautious approach can only be beneficial.

In our previous newsletter available here IFA Newsletter September 2025 | Grove Pension Solutions, we included a number of links to useful information regarding these upcoming changes.

Whilst people with estates totalling less than £1m remain largely unaffected, for the thousands of others this will become an increasing consideration in advice as we approach the April 2027 implementation.

This is a particularly useful article around Trust-based IHT mitigation, if this is not an area you’ve previously focused on Trusts: Advisers’ IHT on pensions questions answered

The Grove Pensions Solutions (GPS) CETV Index provides an average CETV based on a £10,000 per year pension. This is calculated by analysing the actual CETV and benefit value of thousands of ‘real-world’ CETV’s calculated since January 2024. This is unlike other indexes that use a ‘typical’ CETV based on assumptions.