Pension scam red flags remain high as DB transfer activity recovers

Defined benefit (DB) transfer activity "picked up" in October, whilst the proportion of pension scam red flags remained high at 60 per cent, according to the XPS Transfer Watch.

The XPS Transfer Activity Index increased to an annual equivalent of 0.62 per cent of eligible members in October, following a record low of 0.54 in September, which was “marginally lower” than the 0.58 per cent rate recorded at the onset of the UK lockdown.

The Transfer Value Index meanwhile, has remained “surprisingly stable” over the past month, increasing from £256,000 at the end of September, to £257,000 at the end of October.

XPS Pensions Group partner, Mark Barlow, commented: “Despite the significant economic uncertainty arising from the coronavirus pandemic, Brexit and the US election, transfer values remained surprisingly stable during October.

"We have also seen activity pick up from the record low experienced in September."

In addition to this, the XPS Red Flag Index showed a continued “high proportion” of red flags on transfers, with 60 per cent of transfers showing signs of a possible scam, although this is 2 per cent lower than the record high of 62 per cent recorded in September.

This follows the recent launch of The Pension Regulator's (TPR's) combat scams pledge initiative, which XPS and PensionBee have both committed to.

XPS Member Engagement Hub client lead, Helen Cavanagh, added: “The launch of TPR's pledge is a welcome initiative as it empowers trustees to commit to a step change in making members aware of scam risks.

“Pension scams have been a growing concern for some time, but particularly at the moment as the wider economic and social consequences of Covid-19 make members more vulnerable.”

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