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Rise in pension transfer values continues

12 March 2020

Defined benefit (DB) transfer values continued to rise during February, whilst the number of members taking a transfer value dipped slightly, according to XPS Pension Group’s Transfer Watch.

The XPS Transfer Watch monitors how market developments have affected transfer values for an example member, as well as how many members are choosing to take a transfer.

XPS Pensions Group’s Transfer Value Index rose from £245,800 at the end of January, to £249,700 at the end of February, continuing the increase observed over the first month of 2020. The movement was driven by a 0.1% fall in gilt yields, with inflation expectations barely moving during the month.

XPS Pensions Group’s Transfer Activity Index recorded a decrease in the number of transfers completed in February, to an annual equivalent of 0.89% of eligible members, down from 1.03% in January.

Mark Barlow, partner, XPS Pensions Group commented: “As a result of market turbulence, transfer values have continued their recovery towards the record levels seen in the third quarter of 2019. The slight dip in transfer activity brings it back into line with average rates observed over the past year.

“February has seen significant volatility in the financial markets and understandably this has largely been attributed to Coronavirus. The outbreak and concerns of a pandemic have led to an increase in transfer values, resulting from the fall in gilt yields, as investors have turned to safe havens. Many schemes will have seen their funding levels dented by this market turbulence and so those schemes experiencing high levels of transfer activity, or running a member options exercise, may wish to consider whether their transfer value basis remains affordable.”

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