Pension transfer activity at highest rate in a year; scam red flags remain high

Defined benefit (DB) pension transfer activity increased to the highest rate seen since July 2020 last month, while scam red flags remained "very high", according to XPS Pensions Group's Transfer Activity Index.

The group's Transfer Activity Index showed that DB pension transfer activity continued to increase in June, with an annualised rate of 75 out of every 10,000 members transferring their pension, the highest rate in over a year.

The Transfer Value Index recorded “a very small fall” from £251,000 to £248,000, which XPS highlighted as a reflection of the continued period of stability in the financial markets.

However, the group warned that whilst the Scams Red Flag Index fell 6 percentage points from the five-month high of 61 per cent recorded in May, it still remains “at a very high level”, with 55 per cent of transfers displaying at least one warning sign of a potential scam.

XPS Pensions Group head of member options, Mark Barlow, commented: “We have seen fewer transfers and retirements over the past twelve months, so it’s no surprise that we’re now seeing an increase in activity as lockdown restrictions are eased.

“Whilst scam warning signs remain so high, and with no immediate prospect of laws combatting fraudulent online pensions adverts being strengthened, it’s as important as ever that trustees and employers take steps to support and protect their members.”

Indeed, Barlow's comments follow the recent government confirmation that the Online Safety Bill would not tackle pension fraud via paid-for online advertising, as previously recommended by industry organisations and the Work and Pensions Committee.

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