DB Transfer Values end 2024 at lowest month-end value since 2018
DB Transfer Values end 2024 at lowest month-end value since 2018
23 Jan 2025
XPS Group’s Transfer Value Index remained relatively stable throughout most of 2024, but saw a significant decline in the final quarter, culminating in its lowest month-end value by December. The primary driver has been the sharp rise in gilt yields towards the end of the year, coupled with flat inflationary expectations, resulting in a decrease in the Index of almost 5% over December 2024. Such levels of month-end gilt yields have not been seen for over 25 years. Nonetheless, the Index remained relatively stable for most of 2024 before this late-year dip.
The level of transfers have remained relatively low over the past year, with December 2024’s Transfer Activity Index registering an annualised rate of 17 members in every 1,000 transferring their benefits to alternative arrangements. This rate is in line with the average observed over 2024 and is similar to the rates seen since mid-2023. Pension transfers appear to be a much less popular option than a few years ago, likely reflecting the lower level of transfer values caused by the higher gilt yield environment seen since the gilt yield crisis in late 2022.
85% of cases reviewed by the XPS Scam Protection Service in December raised at least one scam warning flag, according to XPS Group’s Scam Flag Index. This represents a decrease of 4% compared to the previous month. The Index has remained close to 90% throughout 2024, although we have seen a slight dip in the final quarter of the year. Six months on, it seems the new government is not prioritising a review of the Transfer Regulations, suggesting scam warning flag levels will likely remain similar in 2025.
Helen Cavanagh, Senior Consultant, XPS Group, said: "Significant increases in gilt yields in the last month of 2024 brought the Transfer Value Index down to the lowest month-end value since the Index began. After a relatively stable year, gilt yields have reached levels not seen since the early 2000s, causing a decline in transfer values over December.
Despite this downturn, the overall level of transfer activity remained notably stable over the course of the year, showing minimal fluctuation month to month. Whilst overall transfer volumes are down, we believe many members still view this as a valuable option when planning for their retirement arrangements.”
Chart 1 - XPS Transfer Value Index
Chart 2 - XPS Transfer Activity Index
Chart 3 – XPS Scam Flag Index
Table 1 – Transfer Watch over the past 12 months
Source: XPS Group – All data is at the end of each month
Notes:
XPS Transfer Watch is part of XPSArena, a free to access destination for learning support and development for people in pensions. Users will be able to scrutinise the latest data contributing to the headline Scam Flag Index, with filters available to compare warning flag prevalence over time and by several demographic groupings.
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 value.
XPS 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 Group’s Transfer Activity Index represent the annualised proportion of members that transfer out of pension schemes administered by XPS. If replicated across all private sector, funded, UK, DB schemes this indicates that approximately 10,000 DB members leave their schemes each year
XPS Group’s Scam Flag Index tracks the percentage of monthly transfers reviewed by the businesses’ scam protection service that are identified as having warning ‘flags’ which indicate that the member is at risk of being scammed. The flags monitored include both the DWP’s set list of amber and red warnings and further areas of concern identified and monitored by XPS’ Scam Protection Service. The service is provided to the Trustees of approximately 500 occupational pension schemes.