The primary driver has been the sharp rise in gilt yields towards the end of the year, coupled with flat inflationary expectations, resulting in a decrease in the Index of almost 5% over December 2024. Such levels of month-end gilt yields have not been seen for over 25 years. Nonetheless, the Index remained relatively stable for most of 2024 before this late-year dip.
The level of transfers have remained relatively low over the past year, with December 2024’s Transfer Activity Index registering an annualised rate of 17 members in every 1,000 transferring their benefits to alternative arrangements. This rate is in line with the average observed over 2024 and is similar to the rates seen since mid-2023. Pension transfers appear to be a much less popular option than a few years ago, likely reflecting the lower level of transfer values caused by the higher gilt yield environment seen since the gilt yield crisis in late 2022.
85% of cases reviewed by the XPS Scam Protection Service in December raised at least one scam warning flag, according to XPS Group’s Scam Flag Index. This represents a decrease of 4% compared to the previous month. The Index has remained close to 90% throughout 2024, although we have seen a slight dip in the final quarter of the year. Six months on, it seems the new Government is not prioritising a review of the Transfer Regulations, suggesting scam warning flag levels will likely remain similar in 2025.
Helen Cavanagh, Senior Consultant, XPS Group, said: "Significant increases in gilt yields in the last month of 2024 brought the Transfer Value Index down to the lowest month-end value since the Index began. After a relatively stable year, gilt yields have reached levels not seen since the early 2000s, causing the decline in transfer values over December. Despite this downturn, the overall level of transfer activity remained notably stable over the course of the year, showing minimal fluctuation month to month. Whilst overall transfer volumes are down, we believe many members still view this as a valuable option when planning for their retirement arrangements.”
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