Pension transfer activity was the highest since July 2020 in November, as more pension members transferred between providers.
XPS Pensions Group’s Transfer Activity Index showed an annualized rate of 87 members per 100,000 were transferring pensions during November as values started to recover from record lows.
The pension consultancy’s Transfer Value Index stood at £179,000 at the end of November, a rise of 2% from October.
The increase in transfer values was largely a result of a small fall in gilt yields during November.
With financial markets stabilising, transfer values were much less volatile in November, with a 5% difference between the highest and lowest values seen during the month in comparison to an 18% difference in October.
Mark Barlow, head of member options at XPS Pensions Group, said: “We saw a significant spike in the number of members taking a transfer during November, with activity at levels not seen for over two years. This may be due to members looking to their pensions to help them to manage through the current cost-of-living-crisis.
“With transfer values still near record lows it’s important that members are receiving high quality financial advice before making decisions that could impact their retirement. As highlighted in our recent member outcomes survey, pension schemes can be a crucial source of support for members, helping them to make the right decision for their circumstances.”
There were a slightly lower number of transfers raising scam flags in November.
However, 93% of cases reviewed by the XPS Scam Protection Service in November still raised at least one scam warning flag, according to XPS’s Scam Flag Index.
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.
XPS Pensions Group’s Transfer Activity Index, shows the annualised proportion of members that transfer out of pension schemes administered by XPS. If replicated across all private sector, funded, UK, DB schemes this indicates that approximately 50,000 DB members leave their schemes each year.
XPS Pensions Group’s Scam Flag Index tracks the percentage of monthly transfers reviewed by the businesses’ scam protection service that are identified as having warning ‘flags’ which indicate that the member is at risk of being scammed. The flags monitored include both the DWP’s set list of amber and red warnings and further areas of concern identified and monitored by XPS’ Scam Protection Service. The service is provided to the trustees of approximately 350 occupational pension schemes.
