Transfer values fall over June – XPS Transfer Watch

Defined benefit transfer values fell slightly over June 2019, according to XPS Transfer Watch.

The Transfer Value Index ended the month at £240,800, down from £241,500 at the end of May. XPS said the fall was driven by a slight reduction in expectations for future inflation.

The data shows that the number of DB transfers over the month also fell marginally. Its Transfer Activity Index showed a slight decrease in the number of transfers that the administration business processed during June, compared to May.

The transfers processed would imply an annual equivalent of 0.87 per cent of eligible members, compared to 0.94 per cent last month. This remains below the average that we have seen over the last 12 months, of 1.18 per cent.

Commenting, 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 per cent.

“The results of the FCA study into DB transfer advice are concerning. In particular, the recommendation rates are significantly higher than that seen by our clients who have appointed a financial adviser to support their members. There is a risk that members are making decisions that are not in their best interests and we welcome the steps that the FCA is taking to improve the standards of pension transfer advice.”

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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