Transfer values slump to lowest level in 7 years

XPS Pension Group’s Transfer Value Index fell nearly 7% in May – equivalent to £10,000 on a typical pension pot – to £159,000 compared to April (£169,000).

May saw the lowest month-end value since XPS launched the Index in 2016.

XPS Pensions Group’s Transfer Value 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.

XPS says the continued fall in values is primarily due to a steady rise in gilt yields in May in tandem with a slight fall in long term inflation expectations.

Helen Cavanagh, a client lead at XPS Pensions Group, said: “While 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.”

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In contrast to falling values, XPS’s Transfer Activity Index increased substantially during May. It showed an annualised rate of 55 members per 100,000 transferring out of their current scheme to an alternative arrangement, a sharp increase compared to April and a shift which breaks the trend of falling activity over the previous few months.

In terms of scam warnings, some 93% of cases reviewed by The XPS Scam Protection Service in May raised at least one scam warning flag, according to XPS’s Scam Flag Index, a slight fall compared to April.

Transfer Watch over the past 12 months

Source: XPS Pensions Group – All data is at the end of each month

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