Defined benefit (DB) pension transfer values fell to £152,000 at the end of October, XPS's Pension Transfer Value Index has revealed, marking lowest the month-end value that has been recorded since the Index was first published in 2018.

Further falls were seen during the month, as XPS’s Transfer Value Index fell to £149,100 as at 19 October, the first time it has dipped below £150,000 since the immediate aftermath of last year’s mini budget.

Whilst the Index rallied slightly to finish the month at £152,000, this remained 3 per cent lower than the end of September, marking the lowest the month-end value that has been recorded since the Index was first published in 2018.

This marked a continuation of the downward trend seen in transfer values since June 2023, with XPS suggesting that the primary driver for this is the continued increase in gilts yield paired with slightly lower long-term inflation expectations.

Despite the continued fall in transfer values, XPS’s Transfer Activity Index saw a small increase over October 2023, to an annualised rate of 22 members in every 1,000 transferring their benefits to alternative arrangements.

According to XPS, the volume of activity over the past few months has stabilised, with only small incremental changes being observed.

XPS Pensions Group partner, Mark Barlow, stated: “The combination of high gilt yields and lower long-term inflation expectations is driving down transfer values, making it a difficult time for anyone who wants to transfer out of their DB pension.

“Transferring could still be the right decision, particularly with attractive annuity rates available, but it’s crucial that pension scheme members are getting quality support and financial advice before making any decisions about how to access their pension.”

Whilst scam warning signs remained high, there were improvements, as October marked only the second occasion since May 2022 that the index has fallen below 90 per cent.

According to the update, 84 per cent of cases reviewed by the XPS Scam Protection Service in October raised at least one scam warning flag, which XPS attributed to an increased number of members choosing to purchase immediate annuities, with favourable pricing reflecting current market conditions.

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