Defined benefit transfer values rose to a record high in July as Gilt yields continued to fall, whilst the number of members taking a transfer continued at pre-lockdown levels.
XPS Pensions Group’s Transfer Value Index reached a record high of £261,500 on 30 July, before falling back to end the month at £260,700, up from £259,700 at the end of June.
Transfer activity in July was at an annual equivalent of 0.94% of eligible members, down from 1.05% in June, but the number of completed transfers remained around the levels seen prior to the Covid-19 pandemic.
Financial advice firms have continued to exit the defined benefit transfer advice market, while some other firms have severely restricted the services that they offer, primarily due to the recent Financial Conduct Authority ban on “contingent charging” from 1 October, leading to concerns about a capacity crunch.
Mark Barlow, Partner, XPS Pensions Group, said that the continuing rise in transfer values made them an increasingly tempting option for members, but employers and trustees have a vital role in ensuring members have sufficient support available when considering such important decisions.
“As we expected, a number of financial advisors are leaving the DB transfer advice market following the ban on contingent charging. This will make it harder for members to get crucial advice, leaving them vulnerable to poor decisions or, at worst, pension scams,” he said.