Scam warnings on DB transfers fall 7%

The XPS scam flag index revealed that 86 per cent of cases raised at least one scam warning, the first time the index has fallen below 90 per cent since May 2022. 

In part, this was due to a larger proportion of transfers being used to purchase an immediate annuity, given rising interest rates have made annuity pricing more favourable to members over the past year.

XPS said transfers into annuities are at lower risk of generating scam warning flags than transfers into other receiving vehicles. 

This is because the member is not required to make any investment decisions, reducing the opportunities for a scammer to influence the member and their decision making.

Source: XPS Scam Flag Index

Meanwhile, XPS Pensions transfer data recovered from its previous low during August, with an annualised rate of 28 members per 100,000 transferring out of their current scheme to an alternative arrangement.

This has increased from 19 members per 1000 since July 2023.

Source: XPS Transfer Value Index

The value of DB transfers remained stable, finishing August at an average of £159,000.

XPS said this can be attributed to reduced volatility in gilt yields and long-term inflation expectations over the past few months, compared to more significant movements seen over 2022 and the start of 2023.

Transfer watch over the past 12 months

sonia.rach@ft.com

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