On the go: Pension transfer values rose substantially during March, peaking at almost £251,000, according to consultancy XPS Pensions.
The cash value of defined benefit promises trimmed some of those increases to the end of the month at £244,900, an increase of £9,700 on the previous month end.
These enticing figures have continued to encourage high numbers of members to take up transfer options, Willis Towers Watson has found.
Its fourth annual DB Member Choice Survey collected data from more than 100 separate DB transfer exercises, covering 50,000 pension scheme members. One in three schemes now quote individual transfer values on benefit statements at retirement, and 22 per cent of schemes have appointed a firm of financial advisers to support members.
Of members who receive support from their scheme, between 40 per cent and 60 per cent are likely to engage with financial advisers.
Despite high take-up of transfer options, fewer members who receive financial advice are now proceeding to transfer. Anecdotal feedback from financial advisers suggests a number of potential influencing factors – including continuing economic uncertainty related to Brexit, and heightened regulatory scrutiny leading to more caution among financial adviser firms.
Commenting on changing transfer values, Sankar Mahalingham, head of DB growth at XPS, said: “The movements in the transfer value index during March were largely driven by gilt yields, which fell by as much as 0.35 per cent, and ended the month around 0.3 per cent down. Inflation also increased by as much as 0.15 per cent, but ended the month unchanged from the previous month end.
“Gilt yields were observed to drop markedly during the period from March 19-22, around the same time as debate and votes in the House of Commons led to a change in the proposed Brexit date. It is likely that further Brexit-related developments will continue to drive market movements for the foreseeable future.”
The XPS Pensions Group Transfer Value Index tracks the transfer value that would be provided by an example DB scheme to a member aged 64 who is currently entitled to a pension of £10,000 each year starting at age 65 (increasing each year in line with inflation).
