XPS Group’s Transfer Activity Index rises to highest level in 11 months

XPS Group’s Transfer Activity Index rises to highest level in 11 months

28 Aug 2024

XPS’s Transfer Activity Index saw an increase in July 2024, reaching an annualised rate of 23 members per 1,000 transferring their benefits to alternative arrangements. This marks the highest activity rate since August 2023 and the first month in 2024 where the Index has exceeded 0.2%. This increase in activity, following a prolonged period of lower volumes, may be attributed to greater stability in transfer values over recent months, following significant declines since 2022.

90% of cases reviewed by the XPS Scam Protection Service in July raised at least one scam warning flag, according to XPS’s Scam Flag Index. Although this represents a decrease compared to June, the Index remains above the average level over the previous year.

In July, XPS’s Transfer Value Index increased slightly to £158,000, largely due to a decline in gilt yields over the month. This modest reduction in gilt yields reflects the ongoing stability of the index, which has now remained at £160,000 or below for seven consecutive months.

Helen Cavanagh, Senior Consultant, XPS Group, said: "The trend of lower, but more stable, transfer values continue into another month in 2024. Although the Transfer Activity Index has risen slightly this month, it remains approximately 25% lower than the average Index value over 2023. It remains to be seen whether increased stability in transfer values is influencing transfer volumes.”

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.