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Pension scam signs near record highs as 7 in 10 transfer requests show scam warning flags

Pension scam signs near record highs as 7 in 10 transfer requests show scam warning flags

20 Apr 2022

The rate at which pension transfers demonstrated signs of a scam soared in March, as XPS Pension Group’s Scam Flag Index showed that 70% of transfer requests made across the month exhibited indicators of a scam.

The rise represents the third consecutive monthly increase in the prevalence of scam warning flags, which are up from two out of every three requests in February. It is the highest rate of scam flags since December 2020, when 76% of requested transfers showed scam flags.

A recent downward trend in transfer activity also continued in March, with yet another record low number of members transferring. The XPS Transfer Activity Index fell to an annualised rate of 38 members out of every 10,000 transferring their pensions across the month, down from 40 the previous month.

There has also been another fall in the Transfer Value Index, with the month-end average being £245,000, a fall of 2% compared to February and 9% lower than the peak in November 2021. Although inflation expectations increased over March, a continued rise in gilts yields resulted in an overall fall in transfer values.

Helen Cavanagh, Client Lead, Member Engagement Hub, XPS Pensions Group, said:

“We are continuing to see that the updated transfer regulations are having a significant impact on the volume of scam warning flags that are being observed. Whilst the volumes of transfers that are being stopped from proceeding under the regulations are low, many of the flags seen require the member to seek additional scams guidance from MoneyHelper, so there will continue to be pressure on the service to provide guidance to all these members in a timely manner.”

Mark Barlow, Head of Member Options, XPS Pensions Group, added:

“Members tend to be more cautious in times of economic uncertainty, so it is not surprising that transfer activity continues to fall.  We are concerned that although transfer activity has fallen recently, the current cost of living crisis could lead to members looking to access their benefits, leaving them vulnerable to poor outcomes or, at worst, a scam.”

Charts 1 and 2 - XPS Transfer Value Index and XPS Transfer Activity Index

Chart 3 – XPS Scam Flag Index

Table 1 – Transfer Watch over the past 12 months

Source: XPS Pensions Group – All data is at the end of each month.

XPS Transfer Watch is part of XPSArena, a free to access destination for learning support and development for people in pensions.  Users will be able to scrutinise the latest data contributing to the headline Scam Flag Index, with filters available to compare warning flag prevalence over time and by several demographic groupings.



XPS Transfer Watch monitors how market developments have affected transfer values for an example member, as well as how many members are choosing to take a transfer value.

XPS Pensions Group’s Transfer Value Index shows the estimated Cash Transfer Value of a 64-year-old member with a pension of £10,000 a year with typical inflation increases. The value changes over time with market movements. Mortality assumptions are reviewed periodically.

XPS Pensions Group’s Transfer Activity Index, (the bars on the chart) represent the annualised proportion of members that transfer out of pension schemes administered by XPS. If replicated across all private sector, funded, UK, DB schemes this indicates that approximately 50,000 DB members leave their schemes each year

XPS Pensions Group’s Scam Flag Index tracks the percentage of monthly transfers reviewed by the businesses’ scam protection service that are identified as having warning ‘flags’ which indicate that the member is at risk of being scammed. The flags monitored include both the DWP’s set list of amber and red warnings and further areas of concern identified and monitored by XPS’ Scam Protection Service. The service is provided to the Trustees of approximately 350 occupational pension schemes.