DB transfer values slip from record highs

Defined benefit pension transfer values held up close to their record high for most of September but slipped in the last 10 days of the month due to a sharp increase in government bond yields. XPS Pension Group’s Transfer Value Index remained near its record high (£264,300 on 24 August) for most of September before falling in the last 10 days of the month to £251,000. The Index shows the estimated Cash Transfer Value of a 64-year-old member with a pension of £10,000 a year with typical inflation increases. The value changes over time with market movements. Mortality assumptions are reviewed periodically. The XPS Transfer Activity Index (a measure of the number of transfers taking place) remained stable, showing an annualised rate of 62 members out of every 10,000 transferred their pension in September, the same as in August. XPS’s September Scams Red Flag Index fell for the fourth consecutive month, with 46% of transfers showing at least one warning sign of a potential scam or poor member outcomes. The scams index has been at over 50% for most of the past 12 months. Mark Barlow, partner at XPS Pensions Group, said: “While it is promising to see the level of pension scam flag cases continuing to fall, 46% is still a high number of warning signs so potential scams continue to be a cause for concern for trustees and sponsors.” XPS Transfer Watch monitors how market developments have affected transfer values for an example member, as well as how many members are choosing to take a transfer value. XPS Pensions Group’s Transfer Activity Index represents the annualised proportion of members that transfer out of pension schemes administered by XPS. If replicated across all private sector, funded, UK, DB schemes this indicates that approximately 50,000 DB members leave their schemes each year.

DB transfer values slip from record highs

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