Pensions - Articles - Coronavirus fears cause transfer values to rise in February


Defined benefit (DB) transfer values continued to rise during February, whilst the number of members taking a transfer value dipped slightly, according to XPS Pension Group’s Transfer Watch. The XPS Transfer Watch monitors how market developments have affected transfer values for an example member, as well as how many members are choosing to take a transfer.

 XPS Pensions Group’s Transfer Value Index rose from £245,800 at the end of January, to £249,700 at the end of February, continuing the increase observed over the first month of 2020. The movement was driven by a 0.1% fall in gilt yields, with inflation expectations barely moving during the month.

 XPS Pensions Group’s Transfer Activity Index recorded a decrease in the number of transfers completed in February, to an annual equivalent of 0.89% of eligible members, down from 1.03% in January.

 In market news, concerns regarding the COVID-19 (Coronavirus) outbreak is having a severe impact on global financial markets. Stock market falls have already resulted in a serious deterioration in the asset values of many pension schemes. We have also seen a fall in gilt yields over the month, reflecting economic stagnation in the UK and the possibility for central bank intervention.

 

 Mark Barlow, Partner, XPS Pensions Group commented: “As a result of market turbulence, transfer values have continued their recovery towards the record levels seen in the third quarter of 2019. The slight dip in transfer activity brings it back into line with average rates observed over the past year.

 “February has seen significant volatility in the financial markets and understandably this has largely been attributed to Coronavirus. The outbreak and concerns of a pandemic have led to an increase in transfer values, resulting from the fall in gilt yields, as investors have turned to safe havens. Many schemes will have seen their funding levels dented by this market turbulence and so those schemes experiencing high levels of transfer activity, or running a member options exercise, may wish to consider whether their transfer value basis remains affordable.”
  

Back to Index


Similar News to this Story

94 percent view State Pension as an entitlement not benefit
Majority of adults aged 66+ say that Triple Lock is affordable and fair to older generations. Around one in seven rely on the State Pension to provide
Fair play off the pitch
Male players in the English Premier League earn an average of more than £3 million per year, while their female counterparts average around £47,000. T
Why Bitcoin matters to Pension Schemes
Back in November 2024, Cartwright Pension Trusts announced its role in facilitating the first-ever UK DB pension trust investment in Bitcoin. With the

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.