The transfer value of a typical DB pension fell below £150,000 in October, marking the first time since last year’s "mini" Budget that transfer values dropped so low.
According to XPS’s transfer value index, in mid-October transfer values fell to £149,100 but they bounced back slightly to finish the month at £152,000, 3 per cent lower than the end of September.
This was the lowest month-end value that has been recorded since the index was first published in 2018.
XPS said this decrease continues the downward trend of transfer values since June 2023 with the primary driver being the continued increase in gilts yield paired with slightly lower long-term inflation expectations.
Mark Barlow, a partner at XPS Pensions Group, said: “The combination of high gilt yields and lower long-term inflation expectations is driving down transfer values, making it a difficult time for anyone who wants to transfer out of their DB pension.
“Transferring could still be the right decision, particularly with attractive annuity rates available, but it’s crucial that pension scheme members are getting quality support and financial advice before making any decisions about how to access their pension.”
Elsewhere, the number of DB transfers saw a small increase over October 2023, to an annualised rate of 22 members in every 1,000 transferring their benefits.
In terms of scams, 84 per cent of cases reviewed in October raised at least one scam warning flag, according to XPS’s scam flag index.
This is only the second occasion since May 2022 that the index has fallen below 90 per cent.
XPS said this fall can be attributed to an increased number of members choosing to purchase immediate annuities, which may be due favourable pricing reflecting current market conditions.
amy.austin@ft.com
