Defined benefit (DB) transfer values have continued to fall during November, decreasing from £244,200 at the end of October to £241,700, according to XPS Pensions.

Its latest Transfer Value Index attributed the reduction in values to increases in gilt yields over the month.

With October representing the largest drop in the index since it was created, the relatively stable financial markets during November translated into the lowest volatility in the index since July 2018.

The index also recorded a decrease in the number of transfers completed in November, from an annual equivalent of 0.99 per cent of eligible members in October, to 0.81 per cent at the end of November.

XPS Pensions Group partner, Mark Barlow, commented: “It’s perhaps surprising, given the General Election, that November represented the most stable month for our Transfer Value Index in over a year. We will wait to see whether that continues after voters go to the polls on 12 December.

“Transfer activity also fell over November, perhaps impacted by the political uncertainty, but the rates remained broadly in line with those observed recently.”

The index report also noted the potential impact of the proposed changes to RPI, which could see those members with benefits linked to RPI see their transfer value reduce.

Commenting on these proposals, Barlow added: “Market reaction to the proposed changes to RPI has been subdued so far, perhaps reflecting the uncertainty over the timing of any changes.

“This means that transfer values have been largely unaffected so far. However, trustees and sponsors should now consider whether transfer values paid from their pension schemes are providing fair value to members in light of this announcement.”

XPS' Transfer Value Index shows the estimated cash transfer value of a 64 year old member with a pension of £10,000 a year with typical inflation increases. The value changes over time with market movements.

XPS Pensions Group’s Transfer Activity Index represent the annualised proportion of members that transfer out of pension schemes administered by XPS.

If replicated across all private sector, funded, UK, DB schemes this indicates that approximately 50,000 DB members leave their schemes each year.

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