The value of DB transfers is rising back towards the record highs seen last year, according to the latest data from XPS Pensions Group.
The group’s Transfer Value Index rose sharply during July to a figure of £260,000. This is just short of the record high of £261,500 recorded in July 2020.
XPS says this increase was driven largely by a reduction in gilt yields and marks the end of a period of relative stability for pension values.
DB pension transfer activity dipped slightly over the month. The index showed that an annualised rate of 64 members out of every 10,000 transferred their pension.
The ‘scams red flag index in July remained at a similarly high level to last month, with 54 per cent of transfers showing at least one warning sign 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. In addition, it monitors how many members are choosing to take a transfer from their DB pension scheme, and through its Red Flag Index, the number of cases which are potential scams.
Mark Barlow, partner, XPS Pensions Group says: “With transfer values back to record highs, it’s as important as ever that members are provided with as much support as possible when considering a transfer. Encouraging people to seek Pension Wise guidance is a sensible step, but for those deciding to leave their DB pension scheme it is imperative they also have access to high quality unbiased financial advice.”
Helen Cavanagh, client lead, member engagement hub, XPS Pensions Group adds: “Although the red flag index has stabilised this month, it remains at a concerning level. For cases where we identified a warning sign, almost 60 per cent raised concerns relating to fees, including a lack of understanding of the fees that they will be paying in the receiving scheme. This could indicate members are transferring to arrangements that could give poorer retirement outcomes.”
