DB Transfer Values experience bounce following all-time low

DB Transfer Values experience bounce following all-time low

20 Dec 2023

XPS Pension Group’s Transfer Value Index increased by 2.6% during November to £156,000, the largest increase the Index has seen since March, following consistent falls over the year. The primary driver of the increase is the fall in gilt yields, breaking the trend of consistent increases over the past six months.

XPS’s Transfer Activity Index saw a small decrease over November 2023, to an annualised rate of 21 members in every 1,000 transferring their benefits to alternative arrangements, which is the equal lowest value reported by the Index. The Index has been very stable in recent months, with only small changes in activity seen. Whilst the Transfer Value Index has risen this month, values are significantly lower than 18 months ago, which may be resulting in fewer people electing to transfer.

90% of cases reviewed by the XPS Scam Protection Service in October raised at least one scam warning flag, according to XPS’s Scam Flag Index. Whilst this represents an increase of 6% compared to October 2023, this remains slightly lower than the trend over the past year. This is due to a greater number of members continuing to purchase immediate annuities, compared to this time last year.

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 Pensions 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 Pensions 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 Pensions 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 20,000 DB members leave their schemes each year

XPS Pensions 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 350 occupational pension schemes.