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XPS Transfer Watch reveals an increase in scam warning flags despite a new low in pension transfer activity

XPS Transfer Watch reveals an increase in scam warning flags despite a new low in pension transfer activity

17 Feb 2022

XPS Pensions 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. The fall is likely to have been driven in part by difficulties that members continue to face in accessing quality financial advice.

The Transfer Value Index fell again in January to a month-end average of £253,000, 2% lower than 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 proportion of transfers showing red flags for a potential scam or for poor member outcomes rose to 50% after a dip in December. The most prevalent warning flag identified was a lack of member understanding regarding fees that would be paid in the receiving scheme.

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

“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.”

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

“January’s data shows an unwelcome increase in warning flags on transfers. A lack of member understanding of fees remains the most common flag, which will require members to take scams guidance before transferring under the new transfer regulations.”


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

Chart 3 – XPS Scam Flag Index


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 250 occupational pension schemes. 

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