Defined benefit (DB) pension transfer values fell by 3 per cent during September 2023 to a month-end figure of £154,000, XPS Pensions Group’s Transfer Value Index has revealed.

This was 15 per cent lower than a year ago, and transfer values have now fallen by a third since the index was first launched on 30 June 2018.

XPS primarily attributed the fall in transfer values to an increase in gilt yields, while inflation expectations have remained stable following the Bank of England’s decision not to raise interest rates in September.

September’s fall in transfer values continued the overall downward trend that has been observed since June 2023.

According to XPS, DB pension transfer activity also declined in September 2023, from an annualised rate of 28 members in every 1,000 transferring their DB benefits to alternative arrangements to 21 in every 1,000.

The proportion of transfers raising at least one scam warning flag rose to 92 per cent of cases reviewed, up from 86 per cent the previous month.

This marks a return to a similar level to that observed since the introduction of new transfer regulations in 2021.

XPS noted that the return to above 90 per cent of transfers showing scam warnings follows a spike in volumes of members transferring to purchase an annuity, which has a lower risk of scam activity.

“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,” said XPS Pensions Group Member Engagement Hub client lead, Helen Cavanagh.

“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.”

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