Defined benefit (DB) transfer activity stayed low in March, as volumes remained 50 per cent lower than this time last year, despite a “marginal increase” in activity over the past month, analysis from XPS Pensions Group has revealed.

According to XPS's Transfer Activity Index, DB transfer activity increased slightly from the six-year low seen in February, with an annualised rate of 19 in every 1,000 members transferring their benefits to alternative arrangements.

XPS suggested that the decrease may be driven by members being deterred by lower transfer value quotes, particularly if they have previously received a much higher quotation.

Indeed, whilst XPS’s Transfer Value Index rose slightly during March 2024 to £160,000, this still marked an overall decrease of ~2 per cent over Q1 2024, primarily driven by increases in gilt yields, and was not enough to offset the falls in preceding months.

And although transfer values were relatively stable across Q1 2024, XPS pointed out that the March month-end value is "significantly" less than a year ago, when it stood at £175,000.

The XPS Scam Flag Index, meanwhile, remained below 90 per cent for the six consecutive month, with 88 per cent of cases reviewed by the XPS Scam Protection Service in March 2024 raised at least one scam warning flag.

This stands in contrast with the previous six months to March 2024, which had just one instance of the index falling to 90 per cent or below.

XPS suggested that potential changes to the transfer regulations could also lead to a further fall in the index, emphasising however, that trustees will need to continue to have a robust scam protection process in place.”

XPS Pensions Group head of member options, Helen Cavanagh, said: "In early 2024 we saw transfer values experience their most stable quarter since 2022, but values still remain ~10 per cent lower than a year ago.

"Lower transfer values could be driving the Transfer Activity Index to its lowest recorded level.

“Potential changes to the transfer regulations may lead the Scam Flag Index to fall in future. Changes to the regulations are welcomed but trustees will need to continue to have a robust scam protection process in place.”

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