The value of the average DB pension transfer has fallen to the lowest level for seven years, according to latest data from XPS Pension Group.
According to these figures the value of the typical DB transfer value fell by almost 7 per cent in May to stand at £159,000. The is the lowest month-end value to XPS Pension’s Group Transfer Value Index since it was launched in 2016 — excluding the volatile fluctuations seen at the time of last year’s LDI crisis.
XPS said this fall in values has been primarily driven by a steady rise in gilt years over the month, coupled with a slight fall in long term inflation expectations.
Despite falling values transfer activity increased significantly during May, according to XPS’s activity index. This showed an annualised rate of 55 members per 100,000 transferring out of their current scheme to an alternative arrangement. This is a sharp increase compared to April and breaks the trend of falling activity over the previous few months.
Helen Cavanagh, client lead at XPS’s member engagement hub says: “Whilst increasing interest rates reduce transfer values, they do present investment opportunities, which means a transfer could still be in a member’s interest. However, it’s really important that members seek unbiased, quality financial advice to ensure they make a decision that’s right for their circumstances.”
XPS figures also show that at least one scam warning flag was raised in 93 per cent of transfers reviewed in May by the consultancy’s Scam Protection Service. This though is a slight fall compared to April. However XPS says that it has now been a year since the figure last fell below 90 per cent.
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