Month-end transfer values hit six-year low

Month-end transfer values finished below £200,000 at the end of August for the first time since records began in June 2016, while scam red flag volumes have remained high, according to XPS Pension Group’s Transfer Value Index.

The Transfer Value Index showed an average transfer value of £197,000 at the end of August, over £70,000 below the high seen eight months previously.

As long-term inflation expectations had been largely stable over recent months, according to XPS, the continued fall in the index over 2022 was attributed to a “gradual uptick in long term gilt yields”, which reached 3.3 per cent per annum at the end of August.

While a slight drop in transfers was also discovered, with an annualised rate of 38 members per 100,000 transferring their benefits over the month recorded, this still represented the second-highest rate registered since March.

XPS Pensions Group head of member options, Mark Barlow, commented: “Rising gilt yields have meant that many transfer values on offer are now lower than at any point in the last five years, including during the market shock caused by the emergence of the pandemic.

“Whilst some pension scheme members may decide whether to transfer based on prevailing market conditions, others may be driven to transfer out of necessity during the current cost of living crisis.”

Additionally, XPS found that over nine in 10 (91 per cent) cases reviewed in August contained at least one scam warning flag, representing a slight fall from the 94 per cent of recorded in the previous month.

Despite the slight fall, XPS Pensions Group member engagement hub client lead, Helen Cavanagh, stressed that "we have very much entered a phase of continued high scam warning flag volumes as the full impact of the transfer regulations are being felt".

“MoneyHelper has, so far, dealt well with managing appointments due to the increased volumes of referrals," she added. "However, in our view we would see far fewer referrals if overseas investments in the receiving scheme was not an amber warning flag.”

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