Falling gilt yields cause gradual rise in transfer values over March

Written by Adam Cadle
12/04/2018

Pension transfer values increased in March, mainly due to a drop in gilt yields over the month, Xafinity Punter Southall has reported.

According to the Xafinity Transfer Value Index, the total transfer value at the end of March was £235,000, up from £232,000 at the end of February 2018.

The index noted that during the first quarter of 2018 transfer values initially dropped before returning to similar levels seen at the beginning of the year. The difference between the minimum and maximum readings of the Index over March 2018 was £4,400, or around 1.9 per cent.

Xafinity Punter Southall head of DB growth Sankar Mahalingham, commented: “The increase in transfer values over March 2018 was mainly due to a drop in gilt yields over the month. The Bank of England Monetary Policy Committee kept the Official Bank Rate at 0.5% during the month but the market is anticipating gradual rises during 2018. Any delay in actual rises would likely mean an increase in transfer values if the delay is expected to be prolonged.”

The Xafinity Transfer Value 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 age 65 (increasing each year in line with inflation). Different schemes calculate transfer values in different ways. A given individual may therefore receive a transfer value from their scheme that is significantly different from that quoted by the Xafinity Transfer Value Index.

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