UK Gilt Yields Turning Up
With the Bank of England becoming more and more hawkish, gilt yields have finally started to turn up after struggling throughout much of 2017. Already the 10 year gilt yields has jumped by more than 30% climbing from 1.19% at the start of the year to 1.56% today. With inflation remaining at the top end of what the BoE will tolerate and wages growth starting to pick up, many analysts are tipping the trend of rising gilt yields to continue.
However, rising gilt yields are not just something that bond market investors need to take note of, it’s also big news for those with Defined Benefit Schemes. Big news because the transfer value of your defined benefit scheme is directly linked to the yield on UK gilts. Last year when gilt yields were closer to 1% it was common for scheme members to be offered transfer values up to 50 times the annual income offered by their pension. However as yields have risen again the average transfer multiple being offered is falling. But for those that didn’t cash out their pensions in 2017 this isn’t to say the boat has sailed – Yields are still at historically unprecedented lows and are a far cry from the pre-GFC days where yields sat above 5%. This means now is as good a time as any to take advantage of high transfer values and cash out your pension whilst yields remain low.
If you’d like to know more about cashing out a defined benefit scheme then why not get in touch with the UK Pension specialists at AustralianQROPS.
Latest Blog
