XPS Pension Group has found that further increases on the yields of long-dated gilts caused pension transfer values to fall to an unprecedented low of £181,000 ($204,444, €207,043) at the end of September 2022.
This represented a drop of £16,000 over the month, a fall of 8%, according to its transfer value index.
Transfer values have now fallen by almost a third this year with their largest monthly fall in September. The index fell as low as £150,000 on 27 September, following the announcement of the mini-budget and subsequent market reaction, in which gilt yields briefly reached 5% per annum.
Values were at £270,000 in December 2021 – a 33% drop in nine months.
XPS’s Transfer Activity Index also showed an annualised rate of 38 members per 100,000 were transferring pensions to another provider for the second month in succession, which continues the trend of lower volumes of transfers being paid in 2022.
The number of transfer cases raising at least one scam warning flag rose slightly over the month to equal the previously recorded high of 97%, according to XPS’s Scam Flag Index.
Mark Barlow, head of member options at XPS Pensions Group, said: “Whilst the focus on pension funds in recent weeks has been largely on gilt rates and their impact on scheme investments, defined benefit promises remain largely unaffected.
“However, pension scheme members considering a transfer will be impacted as values fall to their lowest level for almost 20 years. On the other hand, those using their transfer to secure benefits in alternative arrangements, for example annuities, will see marked improvements which may offset some or all of the fall.”