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‘Largest ever’ monthly fall in pension transfer values

Mostly attributed to a rise in government bond yields which increased discount rates


Retirement firm XPS Pension Group revealed that there was almost a 5% drop in pension transfer values in February from January 2021.

This marks the “largest ever” fall since the XPS Transfer Watch started tracking the market in 2014.

According to the firm, the sharp drop was due to a rise in government bond yields, which then caused an increase in the discount rates used to place value on a scheme member’s benefits.

Transfer values are now going back to the levels of March 2020, before the first UK lockdown, XPS said.

Transfer activity and red flag indices, however, remain quite steady with XPS’ scam protection service discovering at least one red flag in 58% of transfers carried out in February 2021, with a slight drop for the first two months of the year.


Mark Barlow, partner at XPS Pensions Group, said: “Transfer values plunged during February, returning to levels not seen since the start of lockdown.

“This means members will need to bear in mind the impact on any alternate pension their transfer value can now provide. Despite this we have not seen a fall in transfer activity over the month.”

Helen Cavanagh, consultant at XPS Pensions Group, added: “The fall in our XPS Red Flag Index for two consecutive months is very welcome, and we hope to see this trend continue.

“Protecting members from scams is an area of focus for the industry, which is highlighted by the Pensions Act 2021 imposing conditions on a member’s transfer rights.

“Ahead of the publication of the regulations, due later this year, trustees should be doing what they can to protect their members from pension scams, including signing up to the pension regulators’ scam protection pledge.”

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