Transfer activity highest in two years as values recover from record lows
Transfer activity highest in two years as values recover from record lows
20 Dec 2022
XPS Pensions Group’s Transfer Activity Index reached its highest level since July 2020, showing an annualised rate of 87 members per 100,000 were transferring pensions to another provider during November.
XPS Pension Group’s Transfer Value Index recovered following the record low in October. The Index stood at £179,000 at the end of the month, an increase of 2% from the previous month. The increase in transfer values was largely a result of a small fall in gilt yields during November. With financial markets stabilising, transfer values were much less volatile in November, with only a 5% difference between the highest and lowest values seen during the month, down from an 18% difference in October.
93% of cases reviewed by the XPS Scam Protection Service in November raised at least one scam warning flag, according to XPS’s Scam Flag Index. Although slightly down compared to the previous month, the Index continues to highlight that almost all cases reviewed raised flags, with overseas investment in the receiving scheme making up the majority.
Mark Barlow, Head of Member Options, XPS Pensions Group, said: “We saw a significant spike in the number of members taking a transfer during November, with activity at levels not seen for over two years. This may be due to members looking to their pensions to help them to manage through the current cost-of-living-crisis.
"With transfer values still near record lows it’s important that members are receiving high quality financial advice before making decisions that could impact their retirement. As highlighted in our recent member outcomes survey, pension schemes can be a crucial source of support for members, helping them to make the right decision for their circumstances.”
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.
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.
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, (the bars on the chart) 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 50,000 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.