Latest data from XPS shows scam signs recorded in two-thirds of transfer cases

Latest data from XPS shows scam signs recorded in two-thirds of transfer cases

15 Mar 2022

There was a significant increase in the proportion of transfer request cases processed in February recording at least one scam warning flag, according to XPS Pension Group’s Scam Flag Index. Almost two out of every three potential transfers raised a warning sign, up from one in two last month.

However, transfer activity continues to decrease, with another record low number of members transferring. The XPS Transfer Activity Index fell to an annualised rate of just 40 members out of every 10,000 transferring their pensions across the month, down from 47 in January.

We have also seen the Transfer Value Index falling for the third consecutive month, registering a month-end average of £249,000, down 8% from its peak in November 2021. The yield on gilts continued to tick up during the month, leading to a decrease in transfer values despite the rise in inflation expectations.

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

“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.” 

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

“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”

 

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

 

	2021										2022
	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb
XPS Transfer Value Index (£000s)	246	247	251	248	260	259	251	260	270	258	253	249
XPS Transfer Activity Index (%)	0.68	0.55	0.63	0.75	0.64	0.62	0.62	0.56	0.59	0.50	0.47	0.40
XPS Scam Flag Index (%)	52	59	61	55	54	47	46	47	50	41	50	65

 

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

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.