Defined benefit transfer values hit an all time high in August reaching £258,200, according to the latest XPS Transfer Watch.

Publishing its monthly figures, XPS Pensions Group’s Transfer Value Index jumped sharply to an all-time high of £258,200 on 21 August 2019; up from £247,400 at the end of July 2019. The increase was largely driven by a significant fall in gilt yields during August, partially offset by a small fall in inflation expectations.

The number of members requesting to transfer is also continuing to increase. XPS Pensions Group has seen an increase in the number of transfer quotes being requested across some of their schemes, with some members choosing to pay for an updated calculation with transfer values at their peak.

Commenting, XPS Pensions Group partner Mark Barlow, said: “The impacts of recent volatile markets have seen transfer values increase steadily over the last two months, with an all time high in August.

“The continuing fall in gilt yields has pushed transfer values to new record highs, around 10 per cent higher than they were this time last year. Although there is a lot of uncertainty around the future of the financial markets, an increase in transfer values will mean we are likely to see a lot of members investigating their options.

“Trustees and sponsors should ensure that members considering long term irreversible decisions are being provided with sufficient education and support to enable them to make the right decision for their circumstances and financial futures. We would also recommend schemes consider how the substantial changes in market conditions have affected the funding strategy and whether, in light of this, the transfer value basis remains appropriate.”

XPS Pensions Group’s Transfer Value Index shows the estimated cash transfer value of a 64 year old member with a pension of £10,000 a year with typical inflation increases. The value changes over time with market movements. Mortality assumptions are reviewed periodically.

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