DB Transfer Values fall to their lowest value since October 2023
DB Transfer Values fall to their lowest value since October 2023
26 Nov 2024
XPS Group’s Transfer Value Index fell by almost 2% during October 2024, with the month-end position reaching £153,000, continuing the trend of two consecutive month-on-month decreases in the Index. Transfer values were at their second lowest month-end value since the Index was first published in 2018.
The primary driver for falling transfer values is the recent increase in gilt yields, due in part to investor uncertainty around the announcement of increased borrowing made in the Chancellor’s Budget, which has only been slightly offset by the small increase in long-term inflation expectations.
XPS Group’s Transfer Activity Index has increased slightly over October 2024, reaching an annualised rate of 18 members in every 1,000 transferring their benefits to alternative arrangements. However, the level of transfer activity continues to be low.
According to XPS Group’s latest Scam Flag Index, 86% of cases reviewed by the XPS Scam Protection Service in October 2024 raised at least one scam warning flag. This represents a small decrease of 1% compared to the previous month.
Helen Cavanagh, Senior Consultant, XPS Group, said: "The Transfer Value Index has reached its lowest point since October 2023, which is also the second lowest month-end position since the Index was first published. In contrast, Transfer Activity saw a slight uptick, which may suggest that the volume of transfers is less sensitive to the actual sizes of the transfers compared to other factors.”
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.