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‘Unprecedented times’ could see DB transfer value volatility continue

10 July 2017

Defined Benefit (DB) transfer values decreased by 3.7% in June, falling to £232,000 at the end of the month. This continues the fluctuation seen throughout the year to date, as measured by the Xafinity Transfer Value Index.

The difference between maximum and minimum readings of the Index over Q2 2017 was £13,000 (or around 5.2%).

Sankar Mahalingham, head of DB Growth, Xafinity attributed the volatility primarily to changes in gilt yields. He said: “The volatility we have seen over the second quarter of 2017 is a result of a number of issues such as the uncertainty caused by the General Election and commencement of Brexit negotiations. These are unprecedented times, it remains to be seen whether we will enter a period of relative calm again over the summer months, or whether (as is perhaps more likely) this volatility will continue into the foreseeable future.”

The Xafinity Transfer Value Index tracks the transfer value that would be provided by an example DB scheme to a member aged 64 who is currently entitled to a pension of £10,000 each year starting at age 65 (increasing each year in line with inflation). Different schemes calculate transfer values in different ways. A given individual may therefore receive a transfer value from their scheme that is significantly different from that quoted by the Xafinity Transfer Value Index.

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