Men almost twice as likely to be at serious risk of pension transfer fraud than women

Men almost twice as likely to be at serious risk of pension transfer fraud than women

31 Jan 2022

• 11% of transfers by men showed serious warning signs of a pension scam in 2021, compared to just of 6% of transfers by women
• Higher value transfers are more likely to show warning signs of a potential scam

Pension transfers for men were almost twice as likely to raise a ‘red flag’ – indicating a potential pension scam – than transfers for women throughout the course of 2021, research from XPS Pensions Group has found.

The figures come as pension providers have begun to implement new legislation from the Department for Work and Pensions, which seeks to protect pension savers from losing their life savings in a pension scam.

Under the new rules, which came into force last November, pension providers will have the power to block transfers which demonstrate a regulatory red flag for a scam, such as a member receiving advice from an adviser without the correct permissions, a member requesting a transfer after unsolicited contact from a third party or a member feeling pressured to transfer.

Providers can also ‘pause’ transfers which demonstrates less serious ‘amber flags’ until a member is able to get additional guidance.

Of the cases examined by XPS’s Scam Protection Service across the year, 11% of transfer requests from male pension savers demonstrated a ‘red flag’ as defined in the regulations for a pension scam, compared to 6% for women.

Higher transfer values were also more likely to show signs of scams. The average size of a pension transfer was £211,000 across 2021, while the average size of a transfer demonstrating the most serious warning signs of a scam was £279,000.

XPS Pensions Group’s Scam Service considers other features of a pension transfer which are not covered by the Government’s guidance, including: the member being told they would have to carry out another subsequent transfer after the first, possibly to a scam arrangement; the member being unaware of the identity of the adviser who has signed their transfer paperwork; and high fees, or no upfront fee, being paid to the IFA.

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

“A lot of the red flags which we see plaguing transfers are related to advisors who do not have the correct permissions to provide such advice. It’s crucial that members receive quality advice from a properly authorised, experienced advisor if they are to get the best outcomes, and schemes have an important role to play in not only providing access to that advice, but also blocking or pausing transfers that they suspect may be fraudulent.”

Mark Barlow, Partner at XPS Pensions Group, said: 

“Pension transfers – especially high value ones – continue to be a target for fraudsters. It’s important that pension schemes do everything in their power to ensure that their members are protected from losing their life savings to scams, particularly in light of the new legislation from Government, which requires them to do so.”

The figures come as XPS Pensions Group launches XPS Scam Forensics, an interactive tool which allows trustees and employers to analyse trends in the data on transfer scam flags. XPS Scam Forensics enables users to monitor the prevalence of various types of scam warning signs and compare them by age, sex and size of transfer.

Notes

These figures relate to pension transfers examined by XPS Pension Group’s Scam Protection Service in 2021. In total, 1918 cases were reviewed, with 52% demonstrating a warning flag indicating a possible scam.

The figures in this release refer to the statutory ‘red flags’ identified in the Government’s taxonomy.

XPS Pensions Group’s proprietary taxonomy of scam ‘flags’, was developed by XPS as part of its Scam Protection Service and predates the Department for Work and Pensions’ scam ‘flag’ taxonomy which came into force in November 2021. The XPS taxonomy includes the Department for Work and Pensions flags, but also a much wider range of flags which also include flags relating to poor member outcomes. 

XPS Pension Group's Scam Forensics interactive tool can be accessed here: XPS Scam Forensics