Defined benefit (DB) transfer values continued to increase to yet another record high during July but the number of people opting to exit final salary schemes remains steady, according to XPS Transfer Watch.
XPS Pensions Group's Transfer Value index rose from £259,700 at the end of June to £261,500 on 30 July, before falling back to end the month at £260,700. According to the group, the increase was a result of a fall in gilt yields throughout July.
XPS's index tracks the transfer value that would be provided by a hypothetical DB scheme to a member aged 64 who is entitled to a pension of £10,000 each year, starting at age 65. It increases each year in line with inflation.
Elsewhere, XPS' Transfer Activity index fell during July. However, the number of completed transfers remained around the levels seen prior to the Covid-19 pandemic. In July, it was at an annual equivalent of 0.94%, down from 1.05% in June, equal to 94 in every 10,000 eligible members transferring each year.
DB transfer values have continued to rise throughout lockdown. In May, they rose by almost 4%, increasing steadily throughout the month and finishing at £258,000, up from £249,300 at the end of April.
XPS Pensions Group partner Mark Barlow said the continuing rise in transfer values was making DB transfers an "increasingly tempting" option for members, "however, there are risks associated with transferring, and employers and trustees have a vital role in ensuring members have sufficient support available when considering such important decisions."
He continued: "As we expected, a number of financial advisers 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."
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