Defined Benefit transfer values have continued their sharp fall during June, according to XPS Pension Group.
According to XPS Pension Group’s Transfer Value Index the average at month’s end was £203,000, the lowest level since November 2014, as long-term gilt yields continued to rise.
The proportion of members transferring decreased to an annualised rate of 29 members per 100,000 in the most recent XPS Transfer Activity Index, the lowest ever, following a modest increase in the number of transfer completions observed in May.
With 97 per cent of transfer cases evaluated by the XPS Scam Protection Service being determined to have one or more scam warning indicators, up from 83 per cent in May, the Scam Flag Index for XPS reached an all-time high.
This was primarily a result of the new transfer restrictions’ amber flag for overseas investments, which was raised in 85 per cent of examined cases. If this particular signal were to be eliminated, then the number of cases where scam warning flags were discovered decreases to 62 per cent.
XPS Pensions Group head of member options Mark Barlow says: “Recent rises in gilt yields have seen transfer values plummet for most members. This is likely to make a transfer look less attractive and, as a result, we may see transfer activity remaining subdued for some time.”
XPS Pensions Group client lead, member engagement hub Helen Cavanagh says: “The full effects of the new transfer regulations are now clear. While we support the aim of the regulations to stop pension scams, the prevalence of the overseas investment flag is causing unnecessary delays for some members. Whilst the Government and the Pensions Regulator have recognised concerns from the industry regarding the wording of the regulations, we expect this pattern to persist unless they are revised.”
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