DB transfer values concluded Q2 down 8 per cent from the end of Q1 despite a minor increase in values during the month of June, according to XPS Pensions.
The month-end position of £162,000 was about 2 per cent greater than at the end of May, according to XPS’s Transfer Value Index, which grew modestly during June. According to XPS, the reason for this is a combination of a minor decrease in gilt yields over the past month and a slight rise in long-term inflation predictions.
With the Index at the end of Q2 being nearly 8 per cent lower than at the end of Q1, there was a general decreasing trend in transfer values notwithstanding this slight recovery. This is mostly a result of rising gilt yields throughout that time.
The Transfer Activity Index for XPS decreased over June 2023 to a rate of 25 members in every 1,000, the lowest rate ever recorded since the Index’s inception.
The patterns shown throughout the quarter were sustained in June’s activity, which was lower than Q1 overall. In Q2, transferring members’ average ages increased to 58 from 56 on average in 2019. XPS says this reinforces the current trend of growth and shows that the majority of transferring members are doing so in preparation for retirement.
According to XPS’s fraud signal Index, 95 per cent of the cases examined by the XPS Scam Protection Service in June registered at least one fraud warning signal. While the index has been above 90 per cent since June 2022, this rate is the highest so far in 2023.
XPS Pensions Group head of member options Mark Barlow says: “With continued falls in transfer values seen this quarter, it’s unsurprising that fewer members are taking the decision to transfer their pension. However, we are still seeing members investigating transfers as part of their retirement planning, particularly since annuity rates have improved so substantially.”
XPS Pensions Group’s member engagement hub client lead Helen Cavanagh says: “XPS welcomes the DWP’s commitment to consider changes to the transfer regulations. In particular, we would like to see any changes address the practical issues of the overseas investment flag. This accounts for 40 of all flags raised by XPS, and is the primary driver for our Scam Flag Index remaining over 90 per cent since the legislation was introduced.”
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