Defined benefit (DB) pension transfer activity in the UK hit a record low in April 2024, as the value of a typical transfer also fell to the lowest point in six months, analysis from XPS Pensions Group has revealed.

According to XPS’s Transfer Activity Index, there was a continued trend of decline in transfer activity with an annualised rate of 14 members in every 1,000 transferring their benefits to alternative arrangements, compared to the rate of 19 in every 1,000 members in March.

This was the fourth time the index has fallen to a new record low in the past year, which XPS suggested could be due to the fact that transfer values remain depressed.

Indeed, XPS’s Transfer Value Index fell by 3.4 per cent during April 2024 to £155,000 after a relatively stable Q1 for the index, taking transfer values to their lowest level since October 2023.

Furthermore, XPS pointed out that the primary driver of the fall is a rise in gilt yields, which has been offset slightly by a marginal increase in long-term inflation expectations.

According to the XPS’s Scam Flag Index, 88 per cent of cases reviewed by the XPS Scam Protection Service in April 2024 raised at least one scam warning flag.

This remained unchanged from March 2024 and marked a lower rate than average over the previous year, as XPS found that members continued to purchase annuities at an increased rate, which is at a lower risk of scams because of no investment decisions being made.

XPS suggested that this may be because of the current market conditions resulting in favourable pricing for annuities.

Commenting on the analysis, XPS Pensions Group head of member options, Helen Cavanagh, said: "Transfer values have fallen again during April as gilt yields have risen, following a fairly stable start to 2024.

“Another new low for the XPS Transfer Activity Index reflects a longer-term trend of falling transfer volumes, which continue to persist.”

This article was first published on our sister website, Pensions Age.

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