The XPS Pensions Transfer Value Index marked a sharp rise during July to end the month at £260,000, just short of the record high of £261,500 seen in July 2020.
The increase was driven largely by a reduction in gilt yields and marks the end of a period of relative stability for transfer values.
XPS Pension Group’s Transfer Watch monitors how market developments have affected transfer values for a typical pension scheme member. In addition, it monitors how many members are choosing to take a transfer from their DB pension scheme and, through its Red Flag Index, the incidence of scam red flags identified at the point of transfer.
For July, the Index noted that DB pension transfer activity dipped slightly, with an annualised rate of 64 members out of every 10,000 transferring their pension.
Around 54% of transfers showed at least one warning sign of a potential scam or poor member outcomes. Of these, almost 60% raised concerns relating to fees, including a lack of understanding by pension holders of the fees that they will be paying in the receiving scheme. This, XPS warns, could indicate members are transferring to arrangements that could give poorer retirement outcomes.
Mark Barlow, partner, XPS Pensions Group commented: “With transfer values back to record highs, it’s as important as ever that members are provided with as much support as possible when considering a transfer. Encouraging people to seek Pension Wise guidance is a sensible step, but for those deciding to leave their DB pension scheme it is imperative they also have access to high quality unbiased financial advice.”
