A flurry of activity in the DB pension transfer market has seen record high transfer values. Advisors and investors alike are watching carefully to see if this is a sign of things to come, or if recent concerns over red flags in the market will have an impact on transfers.

Defined benefit pension transfer values reached a new high, but they’re still shorter than what was seen last year.

According to the Transfer Value Index, an individual with a pension of £10,000 a year at 64 years old would receive an estimated cash transfer value of £261,000. The increased value of gilt yields has fallen, marking the end to a period where transfer values were relatively stable.

Scams Red Flag Index remained at a similar level to last month, with over half of transfers showing at least one warning sign of potential scams.

Pension Wise guidance

It is important that members are provided with as much support when considering a transfer. Encouraging people to seek Pension Wise guidance is the sensible step, but those deciding to leave their DB pension scheme should also have access high quality unbiased financial advice in order not to make rash decisions affecting their future income security

The red flag index has stabilised, but it remains at a concerning level. For cases where we identified warning signs about fees and retirement outcomes, many raised concerns, including a lack of understanding of the fees that they will be paying in the receiving scheme. This could be an indication that members are transferring to arrangements which might give them worse retirement outcomes.

The government is pressing ahead with its plans to give more people the opportunity for a comfortable retirement. The Department of Work and Pensions (DWP) has launched a consultation on a “stronger nudge to pensions guidance”. This proposal would mean that pension schemes are required to refer members to Pension Wise guidance before accessing their benefits.

It’s estimated that over 50,000 members leave their schemes each year.

It is important to remember that these transfers can be complex and come with risks. That’s why it’s essential to seek guidance before making any decisions about transferring your pension. At SJB Global, we can help you assess your options and make the best decision for your future.