The XPS Pension Group's Transfer Value Index fell again in January to a month-end average of £253,000, which is 2% lower than it was at the end of December.

The fall was largely due to a continued increase in gilt yields over the course of January and came despite the rises in inflation expectations, the pensions firm said.

XPS Pension Group's Transfer Value Index had climbed to a high of £270,000 at the end of November 2021 alongside expected inflation increases.

The firm's data also suggested at the time that, despite the higher transfer values, transfer activity remained steady at an annualised rate of 59 members out of every 10,000 transferring their pension.

XPS' Transfer Value Index estimates the cash transfer value of a 64-year-old member with an annual pension of £10,000 with typical inflation increases. It takes into consideration changes in the market over time, while also periodically reviewing mortality assumptions.

The Group's Transfer Activity Index fell by a further 6% in January 2022, setting another record low since XPS started tracking activity in 2018 with an annualised rate of 47 members out of every 10,000 transferred their pensions across the month.

"We often see a slump in transfer activity over the festive period, but this is the lowest rate of transfers we have seen since we started the index in 2018," said Mark Barlow, head of member options at XPS Pensions Group at the time. "Although it's unlikely to be affecting activity significantly yet, it's interesting that this fall comes immediately after the introduction of the new transfer regulations, which provided trustees with the power to block transfers."

Despite this fall in activity, the Scam Flag Index rose to 50% after a dip in December, with the most prevalent warning flag identified as a lack of member understanding regarding fees that would be paid in the receiving scheme.

XPS' Red Flag Index reflects pension transfers with at least one warning sign of a potential scam or the possibility for poor member outcomes.

Mark Barlow, head of member options at XPS Pensions Group said: "Transfer activity remains at historically low levels, a sign that members continue to struggle to find suitable financial advice. It's imperative that schemes do all they can to help members access quality advice before they make any decisions about what to do with their pension pots."