Transfer values remain unchanged for second consecutive month

Pension transfer values closed February unchanged at £235,000, after initially increasing during the month, according to XPS Pensions Group.

In its most recent Transfer Value Index, XPS revealed that transfer values saw a sharp fall towards the end of February after the initial increase, bringing it down to the same level as at the end of January.

Transfer values have now remained unchanged for the past two months, as they also valued £235,000 at the end of December 2018.

The difference between the minimum and maximum readings of the index during February was £5,100, around 2.1 per cent, making it a less volatile month than January, which saw a difference of £6,800, or around 2.9 per cent.

Commenting on the findings, XPS Pensions Group head of DB growth, Sankar Mahalingham said: “The transfer value index increased to nearly £240,000 during February before suffering a sharp fall back to £235,000 in the last few days of the month.

“A combination of increased inflation expectations and reduced gilt yields were the reason for the rise in the index initially in February, with increased gilt yields at the end of the month bringing the index back in line with the start of month position.

“The volatility observed in February was similar to January, but lower than that experienced at the end of 2018. During March 2019, there may be more volatility in market conditions as the negotiations regarding Britain’s exit from the EU continue with the 29 March deadline approaching.”

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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