Defined benefit (DB) transfer values climbed by around 3 per cent in April but the number of member transfers fell to a record low, according to XPS Pensions Group.

The pension consultancy’s Transfer Value Index stood at £249,300 at the end of April, an increase from £242,600 at the end of March and almost recovering to the £249,700 reading from February.

XPS attributed this movement to a fall in gilts yields, though added that this was partially offset by a smaller fall in inflation.

The company’s Transfer Activity Index, launched in June 2019, showed the number of completed transfers fell to an annual equivalent of 0.58 per cent of eligible members, down from a previous record low of 0.76 per cent in March.

This represents just under 6 in every 1000 eligible members transferring, with XPS noting that requests for transfer value quotations had fallen by just over a third compared to last April.

XPS partner, Mark Barlow, said: “The ongoing Covid-19 crisis has predictably caused a dip in transfer activity. The record fall will be a result of some schemes putting a temporary halt on transfers, as well as members (and their financial advisers) being less inclined to transfer in such uncertain times.”

Barlow said that transfer activity could “rebound” after lockdown ends but added that “the observed decline in requests in April suggests that any upturn will be some months away due to the lag between transfer requests and completions”.

XPS also highlighted that the apparent drop in transfer interest followed The Pensions Regulator’s updated member communication guidance and its decision to issue a template letter for schemes to send to members who request a transfer value.

The letter, which was jointly developed with the Financial Conduct Authority and the Pensions Advisory Service, urges members to be cautious when considering transferring out of a defined benefit pension scheme.

Barlow continued: “The regulator’s updated guidance continues to focus on the risks associated with DB transfers, particularly the heightened risk of pension scams in the current environment. The joint letter to members will help some to think twice before falling victim to a pension scam, although trustees should not think this is the complete solution.

“Pension schemes should put in place a range of scam protection measures, ensuring that they have multiple lines of defence to protect their members.”

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