Pension transfers have dropped by almost a quarter since last September with the proportion of transfers with scam red flag warnings increasing to 59 per cent of all cases.
XPS’s Transfer Watch Activity Index for April show transfers fell to a rate of 55 in every 10,000 members transferring per year.
The XPS Red Flag Index identifies at least one warning sign of a potential scam or the potential for poor member outcomes. April’s figure of 59 per cent of transfers generating red flags is an increase on the figure of 52 per cent in March.
The Transfer Value Index, reflecting the amount paid out by schemes to members surrendering DB benefits remained largely unchanged over the month as financial markets remained stable.
On the 7th May, the Financial Conduct Authority (FCA) announced its intention to continue scrutinising financial advice on pensions transfers. The FCA has extended its fourth thematic review into the quality of DB transfer advisory firms for at least another year, until Spring 2022.
XPS Pensions Group partner Mark Barlow says : “It is disappointing to see an increase in the Red Flag Index after continual falls for the last three months. With warning signs of poor member outcomes remaining so high, we welcome the FCA’s decision to extend their thematic review with the aim of driving up standards of pensions advice. In the meantime, we continue to work with trustees and employers to ensure their members are able to access high quality advice.”
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