Transfer values have recovered from a sharp fall at the end of last year on the back of falling gilt yields, according to Xafinity.
The firm’s transfer value index showed the size of transfer values for defined benefit (DB) scheme members was around £209,000 at the end of January, up more than £6,000 from the previous month.
The index tracks the transfer value that would be provided by an example DB scheme to a member aged 64 who is currently entitled to a pension of £10,000 each year starting at 65.
In December, transfer values dipped to their lowest point in almost a year, which was driven by a rise in real gilt yields towards the end of 2015.
The firm said the recovery in January, driven mainly by falling gilt yields, would be stronger were it not for a decrease in expected future inflation. Over January, long-dated gilt yields fell by around 0.25% per annum, while expectations of future inflation fell by less than 0.1% per annum.
Xafinity head of proposition development Paul Darlow said: “While an increase of £6,000 appears significant, that increase only brings the index back in line with where the index was for most of 2015.
“I think it’s fair to say we can expect further volatility to the index as the year progresses as the change in gilt yields has been so extreme.”
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