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DB transfer values drop in January

Typical transfer values for defined benefit scheme members fell steadily over the start of the year due to higher gilt yields according to Xafinity’s latest data.

Figures from the firm’s Transfer Value Index shows that the higher transfer values seen towards the end of last year weakened somewhat.

At the end of December 2017, the value of a typical transfer was estimated to be £236,000 but this dropped to £231,000 at the end of January.

This contrasts with the 1.7 per cent increase in transfer values during December last year.

The difference between maximum and minimum readings of the index over January 2018 was £6,000 or around 2.4 per cent.

Xafinity Punter Southall head of DB growth Sankar Mahalingham explains the uptick in gilt yields is the primary reason why transfer values cooled somewhat.

He says: “We have seen a steady fall in transfer values over January 2018. Increases in gilt yields have been the main driver, with inflation remaining relatively stable.”

The index tracks the transfer value that would be provided by DB scheme to a member aged 64 who is currently entitled to a pension of £10,000 each year starting at age 65 and increasing each year in line with inflation.

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