Pension transfer values rise 2% in October

Sophie King reports...

Defined benefit (DB) pension transfer values rose by more than 2% in October, according to the XPS Pensions Group transfer value index (TVI).

The index started the month with its indicative transfer value standing at £230,000 before ending at £235,000, which represented a 2.1% increase. The rise was not a smooth one, however – the difference between maximum and minimum readings of the TVI during October was £8,600, or a swing of about 3.6%.

XPS Pensions Group head of DB growth Sankar Mahalingham attributed the increase in transfer values to a drop in gilt yields and an increase in inflation over the month.

“We mentioned last month it was possible there would be a return to volatility as we approach the deadline for agreeing a deal for Britain leaving the European Union and continued speculation about the type of deal negotiated, including no deal, all of which may impact gilt yields and inflation expectations,” he said.

XPS’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.

As ever, the company stressed any given individual may receive a transfer value from their scheme that is significantly different from that quoted by its Transfer Value Index.