DB transfer values rise

DB transfer indexDB transfer values rose around 3 per cent in January, recovering some of the falls from the lows seen at the end of December 2015, according to the Xafinity Transfer Value Index.

The index, which tracks the transfer value of a £10,000 a year inflation-protected DB benefit starting at age 65, to a 64-year-old, stood at £209,000 at the end of January, more than £6,000 higher a month earlier, but still below the £213,000 figure for March 2015, when Xafinity launched the index.

The recovery is driven mainly by falls in Gilt yields. Xafinity says the recovery would have been stronger but for a decrease in expected future inflation. Over January 2016 long-dated Gilt yields fell by around 0.25 per cent a year while expectations of future inflation fell by less than 0.1 per cent a year. The difference between these two key metrics is the key driver of the Xafinity Transfer Value Index.

Paul Darlow of Xafinity says: “While an increase of £6,000 appears significant, that increase only brings the Index back in line with where the Index was for most of 2015.”