Transfer values near record highs while transfer activity remains steady

Transfer values remain close to record highs during May 2019 as the number of DB transfers over the month increased, according to XPS Transfer Watch, which monitors how market developments have affected transfer values for an example member, as well as how many members are choosing to take their transfer value.

XPS Pensions Group’s Transfer Value Index rose to near-record highs during May 2019 but ended the month at £241,500, from £242,300 at the end of April. The rise was driven by a fall in government bond yields over the month, partially offset by a fall in inflation expectations. As it is three years since the index was launched, our assumptions have been updated to reflect recent life expectancy data which reduced the index by around 2.5% on 1 May 2019.

XPS Pensions Group’s new Transfer Activity Index has shown a slight increase in the number of transfers that the administration business processed during May, compared to April. The transfers processed would imply an annual equivalent of 0.94% of eligible members, compared to 0.87% last month. 

In market news, the recently launched Pensions Transfer Gold Standard is proving popular with advisers as the PFS confirm almost 800 have already signed up since its launch. The Gold Standard is a set of principles intended to raise the quality and transparency of financial advice on DB transfers.

XPS Transfer Watch

Mark Barlow, Senior Consultant, XPS Pensions Group commented: “Transfer values continue to run near record highs and, with the current political uncertainty, it doesn’t seem likely that they’ll fall significantly in the near future.

“There’s been a slight increase in members transferring during May. The index seems to be settling at a figure of around 1% of eligible members transferring each year but we will see whether the current high transfer values result in more members taking a transfer in the coming months.

“We are really pleased that the Industry appears to be embracing the recently-launched Pension Transfer Gold Standard. High quality advice is crucial to ensure that members make the right decision and aren’t tempted by such high values. Particularly as we are in pension scams awareness fortnight, any steps to improve the overall quality and transparency of advice has to be a good thing.”