Steady quarter for DB pension transfers, XPS analysis finds
Steady quarter for DB pension transfers, XPS analysis finds
29 Oct 2024
XPS’s Transfer Value Index saw a marginal decrease over September 2024, with the month-end position of £156,000 in September compared to £158,000 at the end of August. The Index has demonstrated a prolonged period of stability, with month-end values fluctuating within a £5,000 range since the beginning of the year. The third quarter of 2024 has been relatively consistent with only minor fluctuations, dipping slightly at the quarter end to be consistent with the value reported at the previous quarter end of June 2024.
XPS’s Transfer Activity Index has increased slightly over September 2024, reaching an annualised rate of 15 members in every 1,000 transferring their benefits to alternative arrangements. There has been slightly more volatility in the Index over this quarter, with the highest rate of transfers seen in 2024 during July. However, the Index has remained relatively stable over the year to date.
According to XPS Group’s latest Scam Flag Index, 87% of cases reviewed by the XPS Scam Protection Service in September 2024 raised at least one scam warning flag. This represents a small decrease of 1% compared to the previous month and is the lowest rate the Index has reported since February 2024. Over the past quarter, the Index has shown a gradual decline from a high of 92% in June 2024.
Helen Cavanagh, Senior Consultant, XPS Group, said: "Although we saw a slight drop in the Transfer Value Index last month, it continues to fluctuate only marginally, as it has throughout 2024. This stability is attributed to both gilt yields and long-term inflationary expectations remaining fairly stable since the start of the year, resulting in consistently low transfer values. Lower transfer values may be contributing to the lower volume of transfer activity which we have seen over 2024.
We’ve also observed a slight reduction in the number of Scam Flags raised; however, the Index remains at a high level. Nearly three years have passed since the introduction of the 2021 Transfer regulations, but we have heard little from the new Government on their plans to address the industry concerns raised in the 18 month review of the regulations.”
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.