The proportion of pension transfers showing at least one sign of being a potential scam reached a record high of 64 per cent in November, according to XPS Pensions Group.

The company’s Red Flag Index showed that incidents of red flags that might indicate scams had more than doubled since the emergence of the coronavirus pandemic, having sat at below 30 per cent in October 2019.

XPS’ Transfer Watch monitors market developments, the number of members debating a transfer from a defined benefit (DB) scheme and indexes that observe the number of red flags, transfers and transfer activity.

The company added that transfer activity had remained steady and transfer values finished the month largely unchanged, although XPS added that this masked some volatility throughout November, with pension transfer values having briefly dropped to their lowest since April.

Transfer values declined slightly during the month, from £257,000 to £256,000, while transfer activity rose from 0.62 per cent of members to 0.63 per cent.

XPS partner, Mark Barlow, said: “November was a turbulent month with England’s second national lockdown and the US election and Brexit remaining in the headlines. As a result, it is no surprise that transfer values were volatile.”

“It is concerning that we continue to see such high volumes of cases raising red flags of pension scams. The recent Lloyds Bank case will result in pension schemes making one off payments to many former members, presenting a further opportunity for scammers.

“It is vital that trustees and sponsors do all they can to protect their members, including signing up for The Pensions Regulator’s pledge to combat pension scams.”

The Lloyds Bank case referred to by Barlow saw the High Court rule that Lloyds Banking Group pension scheme trustees were responsible for equalising the guaranteed minimum pensions for members who transferred out of one of its DB pension schemes, meaning that pension schemes may need to revisit up to three decades of prior transfers and pay top-ups.

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