Pensions - Articles - January transfer values stay stable but scam red flags fall

 Transfer values and transfer activity remained stable throughout January. After the record high seen in December, there was a welcome fall in the Red Flag Index. However, the volume of red flags that are seen by XPS’s scam protection service remains significant, with 60% of transfers in January 2021 indicating at least one warning sign of a potential scam.

 Helen Cavanagh, Consultant, XPS Pensions Group commented: “While the incidence is down, the breakdown between causes of red flags remains similar. The fall may signal a return to more ‘normal’ transfers, with fewer members looking to get hold of pension savings quickly, a reason that drove some transfers at the start of the pandemic. We are investigating this as it could reinforce the importance of members being informed and aware of options and costs during the transfer process.”

 Mark Barlow, Partner, XPS Pensions Group added: “With red flags remaining at such a high level, the new powers that will introduced by the imminent Pension Schemes Act cannot come soon enough. The Act will allow future regulations, expected later this year, to impose conditions on a member’s statutory right to transfer. Getting these conditions right will be crucial in giving trustees and employers enough power in the fight against pension scams.”

 Chart 1 – XPS Transfer Value and Transfer Activity Index 

 Chart 2 – XPS Red Flag Index