The value of final salary transfer offers has been falling this year, in stark contrast to previous years, when values were revised upwards, James Baxter has warned.
The managing partner of Tideway Investment Partners said the London-based financial advisory firm has handled more than 500 final salary transfer enquiries from more than 70 different schemes in 2015 so far.
Based on this, Tideway has seen transfer values decrease over the year to date, and Mr Baxter said he expected this downward trend to continue.
He added that most schemes now linked their pension increases to the CPI, which is currently running below 1 per cent a year, so increases to deferred final salary pensions were “lower than ever”.
Mr Baxter said: “Until now, delaying thinking about your transfer option had not been an issue for clients, as transfer values have been generally recalculated upwards.
“But deferred pensions are growing at a snail’s pace while the key factor setting the size of the transfer offer, relative to the pension, is falling, so we think it is inevitable that transfer values will start to fall further if gilt yields rise again, as they have done in the past few months.”
Adviser view
Greg Heath, managing director of Lancashire-based Derbyshire Booth, said: “It does not surprise me that final salary transfer offers are falling because gilt yields have been volatile and probably will become more volatile with what’s happening in Greece.
“The advice to clients if they are considering a transfer is that now is the time to do it.”
