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Transfer values continue to slide as over four in five requests register at least one scam warning flag

Transfer values continue to slide as over four in five requests register at least one scam warning flag

27 Jun 2022

XPS Pension Group’s Transfer Value Index indicates that May’s month-end average transfer value was £217,000, the lowest since June 2016. The fall of 7% over May was due to a further increase in gilt yields and a further fall in long term inflation expectations, despite the continued current high inflation rates.

83% of transfers reviewed raised one or more warning flags, according to the Scam Flag Index, the highest rate observed in the tracker’s history and an increase of roughly 30% since the beginning of 2022.

After a six-month period of decline, the rate of members completing transfers record in the XPS Transfer Activity Index rebounded slightly to an annualised rate of 37 members per 100,000.

 Helen Cavanagh, Client Lead, Member Engagement Hub, XPS Pensions Group, said: “We continue to see the rate of potential scam activity referrals tick up. The majority of transfers reviewed are now assessed against the new transfer value regulations, with the overseas investments flag registered in three quarters of cases where a flag was present.”

Mark Barlow, Head of Member Options, XPS Pensions Group, added: “It is interesting to see a small uptick in members completing a transfer during May, despite the continued slide in transfer values. This could be a response to the cost of living crisis, highlighting the importance of providing support to members to ensure they don’t make an uninformed decision or leave themselves susceptible to scammers.”

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.


Notes to editor

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. 

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