Consultancy XPS Pensions Group has said that an increase in transfer values during October is the highest monthly change in more than a year.
The group’s transfer value index tracks what transfer value a benchmark defined benefit scheme would provide to a 64-year old member entitled to a £10,000 a year pension from 65, increasing each year in line with inflation.
The fluctuation recorded in October alone is almost as much as the total for the whole year to September 2018 .
XPS head of DB growth Sankar Mahalingham says that the increase in transfer values over October was due to both a drop in gilt yields and an increase in inflation.
The difference between minimum and maximum readings of the index during October was £8,600 – around 3.6 per cent.
The index stood at £230,000 at the end of September, rising to £235,000 at the end of October.
XPS signaled a potential increase in volatility moving forward in its September index announcement driven by uncertainty around Brexit.
Mahalingham says:”We mentioned last month that it was possible there would be a return to volatility as we approach the deadline for agreeing a deal for the UK leaving the EU and continued speculation about the type of deal negotiated, including no deal, all of which may impact gilt yields and inflation expectations.”