Defined benefit pension transfer values fell to their lowest value in a year in October due to uncertainty around the Chancellor’s Budget, according to XPS’ index.

Values fell 2% to an average of £153,000 to their second lowest month-end value since the XPS Transfer Value Index was first published in 2018.

According to XPS, the primary driver for falling transfer values is the recent increase in gilt yields, due in part to investor uncertainty around the announcement of increased borrowing made in the Chancellor’s Budget, which has only been slightly offset by the small increase in long-term inflation expectations.

XPS Pensions Group’s Transfer Value Index shows the estimated Cash Transfer Value of a 64-year-old member with a pension of £10,000 a year with typical inflation increases. The value changes over time with market movements. Mortality assumptions are reviewed periodically.

Helen Cavanagh, senior consultant at the XPS Group, said: "The Transfer Value Index has reached its lowest point since October 2023, which is also the second lowest month-end position since the Index was first published. In contrast, Transfer Activity saw a slight uptick, which may suggest that the volume of transfers is less sensitive to the actual sizes of the transfers compared to other factors.”

XPS Pensions Group’s Transfer Activity Index represents the annualised proportion of members that transfer out of pension schemes administered by XPS.

The consultancy’s Transfer Activity Index increased slightly over October, reaching an annualised rate of 18 members in every 1,000 transferring their benefits to alternative arrangements. However, the level of transfer activity continues to be low.

The number of potential scams remained steady over the month. 86% of cases reviewed by the XPS Scam Protection Service in October 2024 raised at least one scam warning flag. This represents a small decrease of 1% compared to the previous month.

The Scam Flag Index flags up the risk of a scam but does not imply a scam attack has taken place.