August 2022 has not been a great month for those seeking to transfer out of their defined benefit (DB) schemes.
XPS Pension Group’s Transfer Value Index showed that, by month-end, values had fallen again, continuing the trajectory of the last eight months.
The index recorded an illustrative average value of £197,000 in August, more than £70,000 below the high at the beginning of the year and the first time values finished below £200,000 ($226,600, €229,000) since records began in June 2016.
For those who have sent off a transfer request, however, the scam prevention rules introduced in November 2021 are still struggling to make an impact despite clarifications from The Pensions Regulator and the Department for Work and Pensions issued in July.
According to XPS, 91% of the cases the firm reviewed in August contained at least one scam warning flag, with the presence of overseas investments in the receiving scheme still the most common concern.
Mark Barlow, head of member options at XPS Pensions Group, said: “Rising gilt yields have meant that many transfer values on offer are now lower than at any point in the last five years, including during the market shock caused by the emergence of the pandemic. Whilst some pension scheme members may decide whether to transfer based on prevailing market conditions, others may be driven to transfer out of necessity during the current cost of living crisis.”
Helen Cavanagh, client lead, member engagement hub at XPS…
