XPS Transfer Watch – falling gilt yields push DB transfer values to record high

19 November 2021

XPS Pension Group’s Transfer Value Index rebounded during the month, with DB pension transfer values hitting a new record high of £265,200 on 28 October, before falling back to end the month at £260,000. This new peak surpassed the previous record of £264,300 which was hit on 24 August of this year. The increase was driven by continued high future inflation expectations combined with a dip in gilt yields.

The Transfer Activity Index showed that an annualised rate of 56 members out of every 10,000 transferred their pension, which was a slight fall from the 62 registered in September. The Red Flag Index remained below 50% for a third successive month, with 47% of transfers showing at least one warning sign indicative of a potential scam or poor member outcomes.

XPS Pension Group’s Transfer Watch monitors how market developments have affected transfer values for a typical pension scheme member. It also monitors how many members are choosing to take a transfer from their DB pension scheme and, through its Red Flag Index, the incidence of scam red flags identified at the point of transfer.

In sector news, new transfer value regulations were published on 8 November. The regulations will be implemented from 30 November and will provide trustees with the power to block transfers that do not satisfy at least one of two conditions. The first relates to a receiving vehicle recognised as “safe” whilst the second flags any transfers exhibiting one or more of a set list of scam red warning flags.

Source: XPS Pension Group