Transfer values experience volatile end to 2018

Pension transfer values as measured by the XPS Pensions Group Transfer Value Index remained high during 2018, remaining relatively stable throughout the year until a more volatile December.  The Index ended the year at £235,000, little changed from the figure of £236,000 at the end of 2017.  These figures were also relatively unchanged compared to the Index at the end of 2016, which was £234,000.

The difference between maximum and minimum readings of the XPS Pensions Group Transfer Value Index over 2018 was £17,000 (or around 7%).

During December 2018, the XPS Pensions Group Transfer Value Index increased by 2.3%, but during the month the index was the most volatile it has been since September 2017, with the difference between the maximum and minimum readings being £14,000 (or around 5.9%).

Sankar Mahalingham, Head of DB Growth, XPS Pensions Group comments: “Transfer values jumped sharply in early December before gradually falling again towards the end of the month. These movements were primarily driven by changes in gilt yields, which dropped by almost 0.5%, before recovering towards the end of the month.  Inflation was also volatile, but less so, and ended slightly down over the month.

Despite being relatively stable over the course of the year, transfer values suffered a volatile December. This volatility may continue through the first quarter of 2019 as economic uncertainty around Brexit persists.”

The XPS Pensions Group Transfer Value Index tracks the transfer value that would be provided by an example DB scheme to a member aged 64 who is currently entitled to a pension of £10,000 each year starting at age 65 (increasing each year in line with inflation). Different schemes calculate transfer values in different ways. A given individual may therefore receive a transfer value from their scheme that is significantly different from that quoted by the XPS Pensions Group Transfer Value Index.

For more information please contact:

Sophie Boyd, Senior Consultant, Camarco

Tel: 020 3781 8339 / 07542 834725

Rebecca Noonan, Associate Partner, Camarco

Tel: 020 3757 4981 / 07900 340483