XPS’s Transfer Value Index increased slightly over June, with the month end position of £162,000 almost 2% higher than at the end of May. This is a result of a slight fall in gilt yields over the month coupled with a small increase in long term inflation expectations.
Despite this small rebound, there was an overall downward trend in transfer vales across the quarter, with the Index at the end of Q2 being almost 8% lower than at the end of Q1. This is largely due to rises in gilt yields over the period.
Meanwhile, XPS’s Transfer Activity Index fell over June 2023, to an annual rate of 25 members in every 1,000 – the lowest recorded rate of transfers since the Index commenced.
June’s activity continued the trends seen throughout the quarter, with overall activity across Q2 being lower than Q1. The average age of transferring members in Q2 was 58, up from an average of 56 years old in 2019. This continues the rise seen in recent years and highlights that most transferring members are doing so as part of a retirement decision.
95% of cases reviewed by the XPS Scam Protection Service in June raised at least one scam warning flag, according to XPS’s Scam Flag Index. This represents the highest rate of 2023 so far, whilst the index itself has remained over 90% since June 2022.
The figures come in the wake of the publication of the Department of Work and Pensions’ 18-month review of the Conditions for Transfers Regulations 2021 in June. The review acknowledged concerns about the application of certain flags, and committed to conducting further consultation with the industry and The Pensions Regulator to consider whether any changes to the regulations are required.
Mark Barlow, Head of Member Options, XPS Pensions Group, said: “With continued falls in transfer values seen this quarter, it’s unsurprising that fewer members are taking the decision to transfer their pension. However, we are still seeing members investigating transfers as part of their retirement planning, particularly since annuity rates have improved so substantially.”
Helen Cavanagh, Client Lead at XPS Pensions Group’s Member Engagement Hub added: “XPS welcomes the DWP’s commitment to consider changes to the transfer regulations. In particular, we would like to see any changes address the practical issues of the overseas investment flag. This accounts for 40 of all flags raised by XPS, and is the primary driver for our Scam Flag Indexremaining over 90% since the legislation was introduced.”