The average value of defined benefit (DB) pension transfers hit the lowest month-end level in seven years at the end of May, according to XPS Pensions Group.

Its Transfer Value Index fell by almost 7 per cent during the month to £159,000, the lowest average month-end value since the consultancy launched the index in 2016.

XPS Pensions Group explained that the fall in transfer values was primarily due to a steady increase in gilt yields in May, as well as a slight decline in long-term inflation expectations.

The month-end value was the lowest level seen at any time over the past seven years, excluding the fluctuations in valuation during the gilts crisis last year.

While DB pension transfer values fell in May, the number of members transferring out of their current scheme to an alternative arrangement increased from an annualised rate of 34 members per 100,000 to 55 members per 100,000, XPS’s Transfer Activity Index revealed.

The proportion of transfers raising at lease one scam warning flag fell slightly by 1 percentage point during the month to 93 per cent, according to XPS’s Scam Protection Service.

It noted that it has now been a year since the index last fell below 90 per cent.

Commenting on the analysis, XPS Pensions Group Member Engagement Hub client lead, Helen Cavanagh, said: “Whilst increasing interest rates reduce transfer values, they do present investment opportunities, which means a transfer could still be in a member’s interest.

“However, it’s really important that members seek unbiased, quality financial advice to ensure they make a decision that’s right for their circumstances.”

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