The proportion of transfer request cases processed with at least one fraud warning flag increased significantly in February, according to XPS Pension Group’s Scam Flag Index.
Almost two out of every three proposed transfers triggered a red flag, compared to one out of every two last month. But the number of members transferring continues to decline, with another record low number of members transferring. The XPS Transfer Activity Index plummeted to just 40 members out of 10,000 moving their pensions per month in February, down from 47 in January.
The XPS Scam Flag Index also found that for the third month in a row, the Transfer Value Index has dropped, with a month-end average of £249,000, down 8 per cent from its peak in November 2021. Despite rising inflation projections, the yield on gilts continued to grow over the month, resulting in a drop in transfer values.
XPS Pensions Group client lead, member engagement hub Helen Cavanagh says: “The new flags introduced last year by the Department of Work and Pension’s updated transfer regulations have driven a spike in transfer cases showing warning signs of pension scams. We expect this trend to continue over the coming weeks and months, which will put increased pressure on the Government’s MoneyHelper service to provide guidance to all these members.”
XPS Pensions Group head of member options Mark Barlow says: “Whilst the recent slump in transfer activity shows no sign of abating, our indicative transfer value index has also recently been in decline. We expect that in the shorter term, markets are likely to endure another period of volatility given the current global conflict, which could also lead to an increased risk of wider scam activity”
