After an unsteady period, defined benefit (DB) pension transfer values increased to a record high during June and the number of members taking a transfer value rebounded strongly too.

According to the XPS Transfer Watch its Transfer Value Index - based on internal data from 930,000 scheme members - rose from £258,600 at the end of May to a record high of £260,800 in mid-June.

It then fell slightly to end June at £259,700.

The rise was mainly due to an increase in expectations about long-term inflation during the month, partially offset by rising gilt yields.

Source: XPS Pensions Group

XPS Pensions Group’s Transfer Value Index reflects the estimated Cash Transfer Value of a 64-year-old member with a pension of £10,000 a year with typical inflation increases.

XPS’s other transfer measure, the Transfer Activity Index, also rebounded strongly in June, with the number of completed transfers rising to an annual equivalent of 1.05% of eligible members, the highest rate seen since March 2019. This represents just over 10 in every 1,000 eligible members transferring each year.

Helen Ross, head of member options, XPS Pensions Group, said: “The increase in transfer activity during June is possibly the market catching up following low activity levels since lockdown, due to members hesitating over such big decisions or pension schemes temporarily suspending transfers. However, transfer quotation requests have also increased recently, meaning that we could see this trend continue in the short term.”

“Transfer values rose to record highs during June, which means a transfer will be increasingly tempting. With members facing unique pressures over the coming months, we are concerned about a potential increase in poor outcomes, including pension scams.

“It is now possible for schemes to identify whether their members are vulnerable to scams and put protections in place. High quality financial advice will be crucial here in helping members to make the right decision for their circumstances and, during a recent webinar following the launch of our 2020 member outcomes survey, over 85% of attendees agreed that pension schemes had a role to play in helping their members access advice.”