A staggering 94% of pension transfer cases reviewed by XPS Group’s Scam Protection Service were registered as having one or more scam warning signs in July 2022 – a small fall from 97% in June 2022.
The firm said this is the second month in a row where the rate has been in excess of 90% of cases, with the overseas investment amber flag being the most common warning identified.
However, pension transfer activity seems to be on the rise as the proportion of members switching rose to an annualised rate of 41 per 100,000 – a 41% increase from June 2022.
While this marks a rise in transfers, the rate is still “far below” the volume of activity of recent years, XPS said.
Despite a six-month long decline, XPS Pension Group’s Transfer Value Index slightly improved at the end of July at £210,000 ($248,000, €249,000). The firm said the small increase was due to a slight dip in gilt yields over the same month.
Although this is the first actual increase of 2022, the XPS Transfer Value Index remains 22% below the high recorded in December 2021.
Mark Barlow, head of member options at XPS Pensions Group, said: “Many pension scheme members will be finding that their household finances are under pressure due to the ongoing cost-of-living crisis. Although this is only one month, we have seen a rise in the number of members transferring, possibly to meet their increased income needs.
“Whilst pension transfers can play a valuable role, it is crucial that members have appropriate support, including access to unbiased advice, to ensure that they make the right decision for them.”
Helen Cavanagh, client lead of member engagement hub at XPS Pensions Group, added: “Despite the small fall in scam warning flags last month, we have now entered a period where almost all transfer requests lead to MoneyHelper referrals.
“Whilst many will ultimately be legitimate transfers, we are always wary that new more sophisticated scam practices will continue to evolve. We welcome The Pension Regulator’s recent announcement of its plan to further help educate members and trustees about scams, to renew its effort to co-ordinate scam-fighting intelligence and to bring offenders to justice.”