Defined benefit pension transfer values fell to their lowest value for six years at the end of December after a significant decline in the final quarter, according to pension provider and consultant XPS’s Transfer index.

The index remained relatively stable through most of 2024 but ended in its lowest month-end value by December.

The index fell from £153,000 in November to £146,000 in December. The Transfer Value Index shows the estimated Cash Transfer Value of a 64-year-old member with a pension of £10,000 a year with typical inflation increases. 

The primary driver was the sharp rise in gilt yields towards the end of the year, coupled with flat inflationary expectations, resulting in a decrease of almost 5% over December. Such levels of month-end gilt yields have not been seen for more than 25 years, XPS said.

The level of transfers remained relatively low over the past year, with December’s index registering an annualised rate of 17 members in every 1,000 transferring their benefits to alternative arrangements. That rate is in line with the average 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, reflecting the lower level of transfer values caused by the higher gilt yield environment seen since the gilt yield crisis in late 2022.

The number of scams fell 4% in the month with 85% of cases reviewed by the XPS Scam Protection Service raising at least one scam warning flag.

The scam index remained close to 90% throughout 2024, although there was 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, said XPS. 

Helen Cavanagh, senior consultant, XPS Group, said: "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 the downturn, she said the overall level of transfer activity remained notably stable over the course of the year, showing minimal fluctuation month to month. "While overall transfer volumes are down, we believe many members still view this as a valuable option when planning for their retirement arrangements.”