Pension transfer activity stabilises over June – XPS Pension Group

Hannah Godfrey reports...

Transfer values fell slightly during June 2019, as the number of defined benefit (DB) transfers also fell marginally, according to the XPS Transfer Watch and Transfer Value indices.

The DB transfer value index was less volatile throughout June than it was during May, when the index rose to near-record highs. The index ended June at a value of £240,800, down slightly from £241,500 at the end of May. XPS said the fall was driven by a slight reduction in expectations for future inflation.

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.

The index launched three years ago and has recently been updated to reflect up-to-date life expectancy data, which reduced the index by around 2.5% on 1 May 2019.

‘Welcome stabilisation’

Meanwhile, XPS Pension Group’s Transfer Activity Index, which monitors how many members are choosing to take their transfer value, showed a slight decrease in the number of transfers the administration business processed during the month of June.

The transfers processed implied an annual equivalent of 0.87% of eligible members, the group said, compared with 0.94% in May. XPS added that those figures were below the average 1.18% shown over the previous 12 months.

XPS Pensions Group senior consultant Mark Barlow said: “June has seen a welcome stabilisation of the transfer market. Transfer values remain relatively flat and activity continues to run at an annual rate just below 1%.”