Defined benefit (DB) transfer values rose by nearly 4% in May, and the number of members taking a transfer value increased slightly from the record low observed in April, according to XPS Pensions Group.
XPS's transfer value index increased steadily throughout May, finishing the month at £258,000 up from £249,300 at the end of April.
The increase was a result of a rise in long-term inflation expectations during the month, and now marks the index as only marginally lower than the record value of £260,422 observed in September 2019.
XPS's index tracks the transfer value that would be provided by a hypothetical DB scheme to a member aged 64 who is entitled to a pension of £10,000 each year, starting at age 65. It increases each year in line with inflation.
Elsewhere, the group's transfer activity index rebounded from the record low of 0.58% set in April, with the number of completed transfers increasing to an annual equivalent of 0.65% of eligible members. This represents just more than six in every 1,000 eligible members transferring each year.
May's uptick in both transfer values and members transferring followed a slow April, with Covid-19 putting the brakes on pension transfer activity.
XPS Pensions Group partner Mark Barlow said: "Transfer values rose during May as we saw long-term inflation expectations return to pre-lockdown levels. We also saw a small uptick in transfer activity during May which may be a result of those schemes who initially paused transfers restarting quotations.
"At XPS, around 25% of schemes we work with paused transfers initially but our most recent survey in mid-May showed only 6% continue to suspend quotations."
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