DB pension transfer values see biggest rise in a year during October

Defined benefit pension transfer values fluctuated and had the biggest monthly change for over a year during October 2018, increasing by the end of the month to £235,000.

According to the XPS Pensions Group Transfer Value Index, the value at the end of September 2018 was £230,000, meaning the value rose by £5,000 over the month.

The difference between maximum and minimum readings of the Index over October was £8,600 (or around 3.6 per cent).

Commenting, XPS Pensions Group head of DB growth, Sankar Mahalingham, said: “The increase in transfer values over October 2018 was due to both a drop in gilt yields and an increase in inflation over the month. This is the biggest monthly change for over a year; in fact, the fluctuation in October is almost as much as that for the year to September 2018.

“We mentioned last month that 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.”

The XPS Pensions Group Transfer Value Index tracks the transfer value that would be provided by an example DB scheme to a member aged 64 who is currently entitled to a pension of £10,000 each year starting at age 65 (increasing each year in line with inflation).

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