Over three-quarters of DB pension transfers display scam red flags

The XPS Red Flag Index hit a record high in December 2020, with 76 per cent of defined benefit (DB) transfers showing at least one warning sign of a potential scam, representing a six-month continuous rise in the number of red flags.

DB transfer activity fell 20 per cent in 2020, whilst pension scam red flags increased, with 49 per cent of cases processed during 2020 showing at least one red flag, compared to 34 per cent in 2019.

XPS Pensions Group consultant, Helen Cavanagh, highlighted the findings as "extremely worrying".

She said: “This highlights that the risk of members falling victim to a pensions scam which reinforces the call from the regulator for trustees and the industry to pledge to protect their members.

“Over half of all the scam warning signs identified over the month were fee related, including members lack of understanding of the fees involved, which could indicate members are transferring to arrangements that could be detrimental to their retirement outcomes.”

In addition to this, XPS’s Transfer Watch recorded “substantial volatility” in transfer values throughout 2020, and particularly at the onset of the pandemic, before finishing the year at £259,000, 8 per cent higher than the year start.

Commenting on the findings, XPS Pensions Group partner, Mark Barlow, added: “Even though there has been significant turbulence along the way, transfer values finished 2020 higher than they started it.

“However, we have seen fewer people take the significant decision to transfer their pension during the year, perhaps put off by the current economic uncertainty. More concerning is the surge in pension scam red flags amongst those who have continued to transfer during the year.”

    Share Story:

Recent Stories


Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Are current roads into retirement delivering member value?
Laura Blows explores HSBC Master Trust’s recent report, Converting pension pots into incomes, with HSBC Retirement Services CEO, Alison Hatcher.

Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios
Incorporating ESG into fixed income
Laura Blows is joined by TCW head of fixed income ESG, Jamie Franco, to discuss incorporating environmental, social and governance (ESG) strategies into fixed income portfolios

Advertisement