DB pension transfer activity and values keep falling

28 May 2024

DB pension transfer activity is at a record low, while values have fallen to lowest point in six months, according to the XPS transfer index.

The XPS’s Transfer Activity Index hit a new low in April 2024, with an annualised rate of 14 members in every 1,000 transferring their benefits to alternative arrangements. This continues the trend of decline in transfer activity and was the fourth time the Index has fallen to a new record low in the past year.

The fall in activity comes as transfer values remain depressed.

XPS’s Transfer Value Index fell by 3.4% during April 2024 to £155,000. This fall comes after a relatively stable Q1 for the Index, taking transfer values to their lowest level since October 2023. The main driver of the fall is a rise in gilt yields, which has been offset slightly by a marginal increase in long term inflation expectations.

Meanwhile, 88% of cases reviewed by the XPS Scam Protection Service in April 2024 raised at least one scam warning flag, according to XPS’s Scam Flag Index. This was unchanged from March 2024, and marked a lower rate than average over the previous year.

Members continued to purchase annuities at an increased rate, which are at lower risk of being the target of scams given no investment decisions are being made. This may be due to current market conditions resulting in favourable pricing for annuities.

Helen Cavanagh, head of Member Options, XPS Pensions Group, said: “Transfer values have fallen again during April as gilt yields have risen, following a fairly stable start to 2024. Another new low for the XPS Transfer Activity Index reflects a longer-term trend of falling transfer volumes, which continue to persist.”

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