Transfer values hit all time high in August

Defined benefit (DB) transfer values rose to record highs in August 2019, while the number of members requesting a transfer value continues to increase, according to XPS Transfer Watch.

XPS Pensions Group’s ‘Transfer Value Index’ jumped sharply to an all-time high of £258,200 on 21 August 2019; up from £247,400 at the end of July 2019. The increase was largely driven by a significant fall in gilt yields during August, partially offset by a small fall in inflation expectations.

XPS Pensions Group have seen an increase in the number of transfer quotes being requested across some of their schemes, with some members choosing to pay for an updated calculation with transfer values at their peak.

Mark Barlow, Partner, XPS Pensions Group commented: “The impacts of recent volatile markets have seen transfer values increase steadily over the last two months, with a sharp increase into August. The continuing fall in gilt yields has pushed transfer values to new record highs, around 10% higher than they were this time last year. Although there is a lot of uncertainty around the future of the financial markets, an increase in transfer values will mean we are likely to see a lot of members investigating their options.

“Trustees and sponsors should ensure that members considering long term irreversible decisions are being provided with sufficient education and support to enable them to make the right decision for their circumstances and financial futures. We would also recommend schemes consider how the substantial changes in market conditions have affected the funding strategy and whether, in light of this, the transfer value basis remains appropriate.”