UK pensions…Returning to normal? Then along comes Coronavirus

Up until January things seemed to be getting back to normal

The amount that companies would offer as a transfer value for a £10,000 annual pension rose from £238,800 at the end of 2019 to £245,800 by January 31 2020. While this was still off the highs of 2019 it was a reversing of a downward trend.

In addition, the number of transfers (measured by the XPS Transfer Activity Index) has been rising for the past few months. Helen Ross, Head of Member Options, XPS Pensions Group said: “The marked increase in transfer activity is likely due to the elimination of some of the political uncertainty plaguing the markets over the last year, which may have been putting members off making big financial decisions.

Source: https://www.xpsgroup.com/news-and-views/transfer-values-regain-lost-ground-in-january/

Coronavirus changes the picture in a month

The biggest determinate of transfer values is UK bond yields.  The lower these go the higher the transfer value of pensions go.  The Coronavirus news spooking the markets has driven bond yields down in the UK back to the point they were at during the height of Brexit uncertainty.  Based on falling bond yields we would expect to see transfer values reverting to the highs seen last year (as shown in the above XPS graph).

Source: https://www.marketwatch.com/investing/bond/tmbmkgb-15y?countrycode=bx

Workplace pensions likely to drop deeper into the red

The PwC SkyVal pension index at the end of January saw the combined deficit of defined benefit pension funds climb a whopping £40 billion from £170 billion in December to £210 billion in January.  The UK’s 5,450 DB schemes reported assets of £1,790 billion, compared with pension liabilities of £2,000 billion. 

Since then the coronavirus has decimated share markets leading to likely falls in UK pension asset values, while at the same time inflating liabilities (transfer values) for these schemes.  This will be placing increasing pressure on UK schemes to top up their funds from earnigs so they can meet their obligations to members.

Get “control” of your UK pension

To be clear just because there are troubles in the UK does not mean that you should simply transfer your pension.  That would be blind decision making.  There are reasons to leave a UK pension in the UK and reasons for transferring it – there is no universal right or wrong answer.  No two people or circumstance are the same, so you need to be sure you’ve made the right decision for your UK pension based on your personal circumstances. 

 


 

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straightforward and painless

Until now I'd imagined my UK pension funds being locked away behind all manner of firewalls and bureaucratic hurdles to access on retirement. Before committing the one surviving official document of my English OE to the bin - a single page detailing my private pension details - I contacted you out of curiosity. The result feels a little like winning lotto.

Peter W

very stress free

Thank you Cambel for your help and guidance throughout this process in getting my pension transferred (very stress free for me). It is greatly appreciated and I would certainly recommend you and Charter Square to others who are interested in transferring their pension.

David R, New Zealand

You guys rock!

I just wanted to say a great big thank you to you and your team. You are all totally awesome. I received a cheque yesterday from the Prudential to apologise for the ‘recent inconvenience’ that I had experienced. Thank you for doing this for me. You guys rock!

Noelle B, New Zealand

professional, insightful

Charter Square were professional, insightful and a pleasure to work with. They rose to the challenge of consolidating my overseas pensions and bringing them home with minimum fuss for me and maximum effort on their part.

Jens H, New Zealand

thorough, professional and prompt

Very thorough, professional and prompt service from the team at Charter Square. Thanks for making the bewildering world of pension transfers super simple.

Jules T, New Zealand

Best party to deal with

Thank you kindly for keeping in touch with me. For now, I will not be moving my pension. I will however be keeping your details and referring back to you when I wish to pursue. You by far are the best party to deal with, no nonsense, professional and in my opinion genuine. I do sincerely thank you for your advice to date.

GE, New Zealand

Freedom

Securing the freedom to use savings that are actually ours to work with has been stressful in the extreme. While I never planned on giving up there were many times when the current (UK) holder made the whole process seem well beyond my determination and ability. It’s easy to look at the 36 month history of this claim with the benefit of hindsight, but the conclusion is that employing Charter Square in the first instance would have been wise had I been able to anticipate the red-tape that appears to have been deliberately created to stall access.

CP, Auckland