DB transfer values hold steady after September dip

Defined benefit (DB) transfer values remained stable throughout October after a turbulent drop in September, according to Xafinity’s transfer value index.

Over the course of October, the value of Xafinity’s hypothetical pension fluctuated 2.3% between £229,000 and £234,000, compared with the 11% fluctuation seen in September that resulted in a 4% dip.

October’s calm after the September storm has meant DB transfer values, according to Xafinity, were still down on the levels seen at the end of August when the index rose by 3% from £230,000 at the start of the month to £237,000 by the end of it.

Xafinity’s index tracks the transfer value that would be provided by a hypothetical DB scheme to a member aged 64 who is entitled to a pension of £10,000 each year, starting at age 65. It increases each year in line with inflation.

The firm’s head of DB growth Sankar Mahalingham said: “Transfer values stayed fairly stable during October 2017, compared with the volatility in transfer values that we have seen in previous months of 2017.

“At the beginning of November, the Bank of England raised the Official Bank Rate for the first time since July 2007, but this was anticipated by markets and was already reflected in the fall in the index over September 2017 – and there has been little change to the index in early November.

“The markets are anticipating another rise towards the end of 2018 -and any delay in a rise would mean an increase to transfer values.”