Defined benefit (DB) pension transfer values fell by almost 5 per cent during December 2024, according to analysis from XPS Group, dropping to their lowest level since the its index began in 2018.

XPS Group's Transfer Value Index remained relatively stable throughout most of 2024, but saw a significant decline in the final quarter, culminating in its lowest month-end value by December.

The primary driver was the sharp rise in gilt yields towards the end of the year, according to XPS, coupled with flat inflationary expectations.

Such levels of month-end gilt yields have not been seen for over 25 years, the firm added.

The transfer level has remained relatively low over the past year, with December 2024's Transfer Activity Index registering an annualised rate of 17 members in every 1,000 transferring their benefits to alternative arrangements.

This rate aligns with the average observed over 2024 and is similar to those seen since mid-2023.

XPS Group senior consultant, Helen Cavanagh, commented on the findings: "Significant increases in gilt yields in the last month of 2024 brought the Transfer Value Index down to its lowest month-end value since the Index began. After a relatively stable year, gilt yields have reached levels not seen since the early 2000s, causing a decline in transfer values over December.

"Despite this downturn, the overall level of transfer activity remained notably stable over the year, showing minimal fluctuation month to month. Whilst overall transfer volumes are down, we believe many members still view this as a valuable option when planning for their retirement arrangements."

Meanwhile, 85 per cent of cases reviewed by the XPS Scam Protection Service in December raised at least one scam warning flag – a 4 percentage point decrease from November, according to XPS Group's Scam Flag Index.

The index has remained close to 90 per cent throughout 2024 despite a slight dip in the year's final quarter.

---