The proportion of defined benefit (DB) pension transfer requests that raised at least one scam warning flag fell to 86 per cent in August, XPS’s Scam Flag Index has revealed, marking the first time that the index has fallen below 90 per cent since May 2022.

XPS Pensions Group suggested that the fall was due, in part, to a larger proportion of transfers being used to purchase an immediate annuity, after rising interest rates made annuity pricing more favourable to members over the past year.

Transfers into annuities are at lower risk of generating scam warning flags than transfers into other receiving vehicles, as the member is not required to make any investment decisions, reducing the opportunities for a scammer to influence the member and their decision making.

XPS also provided an update on its transfer value and activity trackers, revealing that the Transfer Activity Index has recovered from its previous five-year low, with an annualised rate of 28 members per 100,000 transferring out of their current scheme to an alternative arrangement in August, compared to 19 members per 1000 since July 2023.

The group's Transfer Value Index, meanwhile, continued to remain fairly stable, finishing the month at £159,000.

This was 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.

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