Savers See Pension Transfer Values Hit A New High

Retirement savers switching their defined benefit funds have been offered the highest golden goodbyes ever by their company pension schemes.

Average transfer values hit a peak of £258,200 on August 21 (2019) – more than £10,000 extra than the £247,400 offered at the end of July.

A significant fall in gilt yields was blamed for the increase, although a small amount was offset by a small drop in the cost of living.

The data from market monitor XPS Pensions also reported a higher than usual number of transfer requests from retirement savers.

Some savers who had delayed a transfer even offered to pay for updated transfers to take advantage of the record breaking figures, said the report.

Falling gilt yields blamed for rise

Mark Barlow, a partner at XPS Pensions, said: ““The continuing fall in gilt yields has pushed transfer values to new record highs, around 10 per cent higher than they were this time last year.

“Although there is a lot of uncertainty around the future of the financial markets, an increase in transfer values will mean we are likely to see a lot of members investigating their options.

“We would also recommend schemes consider how the substantial changes in market conditions have affected the funding strategy and whether, in light of this, the transfer value basis remains appropriate.”

City watchdog the Financial Conduct Authority (FCA) and many pension advisers recommend staying with a direct benefit pension is best for most retirement savers.

Finding transfer advice

Tom Selby, senior analyst at investment platform and pension provider AJ Bell, said while direct benefit pensions were valuable, sometimes transferring could be the right thing to do.

He said: “Although the transfer value on offer is only part of that calculation, as values rise you would expect demand to increase. Furthermore, Financial Conduct Authority statistics suggest there are more positive transfer recommendations as transfer values go up, and fewer when they drop.

“However, a combination of tightening regulation and rising professional indemnity costs has constrained the supply of advice, with some choosing to pull out of the market altogether.

“As a result, we have a situation where some people simply cannot find an adviser willing to take on their case.”

Stay Connected

Latest News

Non Resident Landlord Scheme Explained for Expats

The UK Non-Resident Landlord Scheme (NRLS) is the way HM Revenue & Customs collects tax on rents from property owners who spend...

OECD Explained

The Organisation of Economic Co-Operation and Development (OECD) is a forum for the governments of 37 developed countries to discuss economic and...

QROPS List – June 1, 2020

The number of Qualifying Recognised Overseas Pension Scheme (QROPS) across 28 countries has hit 1,917 – with 13 opening during the past...

FATCA List – June 2020

The US Internal Revenue Service’s list of foreign financial institutions (FFI) reporting under the Foreign Account Tax Compliance Act (FATCA) increased by 1,854...

Economic Impact Payments for US Expats

The US government is paying millions of dollars into the bank accounts of American expats as coronavirus economic impact payments and this guide will...

HMRC Explained

HMRC is short for Her Majesty’s Revenue and Customs. The HMRC collects the taxes and customs duties that the British government spends...


Please enter your comment!
Please enter your name here