78% of pension transfers raise scam warnings in April

According to the latest data from XPS Pensions Group’s Scam Flag Index tracker, a record 78% of pension transfers raised scam warnings in April 2022.

This figure represents the fourth consecutive month this percentage has risen, up from 50% in January, 65% in February, and 70% in March.

Before new pension transfer rules came into force in November 2021, this figure sat at 41%.

While the rate of potential scam activity continues to grow, the average pension transfer value continues to fall. According to XPS, the average pension transfer was £232,000 at the end of April. Similarly, the number of pension scheme members completing transfers is down, standing at 35 out of 10,000 in April, compared to 38 out of 10,000 in March.

Commenting on the figures, Helen Cavanagh, Member Engagement Hub lead from XPS, said: “Most transfer cases are now being assessed against the flags introduced in the 2021 transfer value regulations, with the overseas investments amber flag triggered in a majority of these cases.

“Complex or unclear fees, or the member not being aware of the fees they are being charged, are the other most common issues being observed.”

Mark Barlow, head of member options at XPS, added: “With inflation hitting unprecedented levels in recent years, members may be looking to their pension to help cope with the cost-of-living crisis.

“However, transfer values have fallen by 15 per cent since November due to increasing interest rates, so we advise caution and that members think carefully before accessing their pension in this way.

“It is crucial that pension schemes take steps now to support their members in making such important decisions.”

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