Nine in 10 DB transfers receive scam warning in July

Despite a slight fall from a level of 97 per cent in June, XPS’s Scam Flag Index revealed that July represented the second month in succession where the rate of scam warnings has been in excess of nine in 10 cases.

The overseas investment amber flag required by the new transfer regulations was the most common warning identified.

Helen Cavanagh, client lead of the member engagement hub at XPS Pensions Group, said: “Despite the small fall in scam warning flags last month, we have now entered a period where almost all transfer requests lead to MoneyHelper referrals. 

“While many will ultimately be legitimate transfers, we are always wary that new, more sophisticated scam practices will continue to evolve.”

Cavanagh added: “We welcome the Pensions Regulator’s recent announcement of its plan to further help educate members and trustees about scams, to renew its effort to co-ordinate scam-fighting intelligence, and to bring offenders to justice.”

Meanwhile, the proportion of members transferring rose to an annualised rate of 41 members per 100,000, representing a 41 per cent increase on the month before, according to the XPS Transfer Activity Index. 

This is the highest rate recorded since January, but remains far below the volume of transfer activity of recent years. Last month, this figure was 29 members per 100,000.

Following a six-month period of decline, XPS’s Transfer Value Index ended slightly up at the end of July at £210,000. The increase was due to a small fall in gilt yields over the month. 

In June, the group’s Transfer Value Index identified that the month-end average transfer value sat at £203,000, the lowest value seen since November 2014.

Despite being the first increase in 2022, the Transfer Value Index remains 22 per cent below the record high seen in December 2021.

Mark Barlow, head of member options at XPS Pensions Group, said: “Many pension scheme members will be finding that their household finances are under pressure due to the ongoing cost of living crisis. 

“Although this is only one month, we have seen a rise in the number of members transferring, possibly to meet their increased income needs.”

Barlow added: “While pension transfers can play a valuable role, it is crucial that members have appropriate support, including access to unbiased advice, to ensure that they make the right decision for them.”