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Scam warning flags reach a new high whilst transfer values continue to plummet

Scam warning flags reach a new high whilst transfer values continue to plummet

24 May 2022

The rate of potential pension scam warning flags showed no sign of abating in April, according to XPS Pension Group’s Scam Flag Index tracker. A record high of 78% of transfers reviewed raised at least one warning sign of potential scam activity, meaning that rates have now risen for the last four consecutive months.

The recent fall in the Transfer Value Index also continued to gather pace, with the month-end value at £232,000 representing a drop of 5% compared to the end of March. This was caused primarily by a further rise in gilt yields and has offset increases in long term inflation expectations.

A similar pattern was seen in the XPS Transfer Activity Index, with the number of members completing transfers falling to an annualised rate of 35 members out of every 10,000, down from 38 in March.

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

“Most transfer cases are now being assessed against the flags introduced in the 2021 transfer value regulations, with the overseas investments amber flag triggered in a majority of these cases. Complex or unclear fees, or the member not being aware of the fees they are being charged, are the other most common issues being observed.” 

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

“With inflation hitting unprecedented levels in recent years, members may be looking to their pension to help cope with the cost-of-living crisis. However, transfer values have fallen by 15% since November due to increasing interest rates, so we advise caution and that members think carefully before accessing their pension in this way. It is crucial that pension schemes take steps now to support their members in making such important decisions.”


Chart 1 - XPS Transfer Value Index

Chart 2 - 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.