Pension transfer values as measured by a major provider increased by nearly £5,000 during February before dropping sharply to end unchanged over the month. 

XPS Pensions says its Transfer Value Index ended February 2019 at £235,000, the same as at the end of January, after peaking at £240,000 earlier in the month.

The difference between maximum and minimum readings of the XPS Pensions Group Transfer Value Index over February 2019 was £5,100 (or around 2.1%).

Sankar Mahalingham, head of DB Growth, XPS Pensions Group, said: “The transfer value index increased to nearly £240,000 during February before suffering a sharp fall back to £235,000 in the last few days of the month. 

“A combination of increased inflation expectations and reduced gilt yields were the reason for the rise in the index initially in February, with increased gilt yields at the end of the month bringing the index back in line with the start of month position.

“The volatility observed in February was similar to January, but lower than that experienced at the end of 2018.  During March 2019, there may be more volatility in market conditions as the negotiations regarding Britain’s exit from the EU continue with the 29 March deadline approaching.”

The XPS Pensions Group 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).

The company points out that different schemes calculate transfer values in different ways.

XPS Pensions Group looks after 1,200 pension schemes, including 25 with over £1bn of assets, and undertakes pensions administration for over 800,000 scheme members.