The value of a typical defined benefit transfer hit the lowest month-end value since 2018, according to XPS Pensions Group.
The transfer value index fell by nearly 3 per cent over September to £154,000, which is 15 per cent lower than a year ago.
Transfer values have now fallen by a third since June 30, 2018, when the index was first launched.
XPS said the primary driver of this fall in transfer values is the increase in gilt yields.
Gilt yields have increased whilst inflation expectations have remained stable following the Bank of England’s decision not to raise interest rates in September.
This fall in the index continues the overall downward trend.
XPS’s Transfer Activity Index also fell over September 2023, to an annualised rate of 21 members in every 1,000 transferring their benefits to alternative arrangements.
The volume of activity over Q3 2023 is considerably lower than the previous quarter, while also remaining close to the lowest recorded value of the Index recorded in July 2023.
Helen Cavanagh, client lead at XPS Pensions Group’s member engagement hub, said: “With the transfer value index falling to a record month-end value, we’ve also seen the number of members electing to transfer remaining low.
“This continues the trend of falling transfer activity, with two months of the last quarter containing the lowest transfer volumes we have witnessed since starting the Index. It may be that lower transfers values are resulting in fewer members concluding that transferring is the best option for them.”
Scam warnings rise
The number of scam warnings on defined benefit transfer were up, despite a previous fall last month, XPS Pensions said.
The XPS scam flag index revealed that 92 per cent of cases raised at least one scam warning.
This represents an increase from 86 per cent from the previous month and has seen the index return to a similar level to that observed since the introduction of the 2021 transfer regulations.
This follows the spike in volumes of members transferring to purchase an annuity, which has a lower risk of scam activity, falling back to the levels seen in previous months.
sonia.rach@ft.com
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