Defined benefit (DB) pension transfer values have recovered around one third of the “sharp fall” seen in February, increasing to £246,000, largely thanks to rising expectations of future inflation increasing the expected value of members' pensions, according to the XPS Transfer Watch.

The group's Transfer Value Index previously recorded the largest monthly drop in DB pension transfer values since 2014, after they fell by almost 5 per cent to £242,000 in February.

The Transfer Activity Index, meanwhile, has remained "steady" in March, increasing slightly from 0.66 per cent to 0.68 per cent.

The Red Flag Index has shown a further small decline in the number of red flags detected by XPS’s Scam Protection Service, with one or more flags identified in 52 per cent of transfers in March.

This compared to 58 per cent in February, and also marks a further improvement on the record high of 76 per cent recorded in December.

However, XPS Pensions Group consultant, Helen Cavanagh, emphasised that this remains "much higher" than the level of red flags seen before the pandemic.

She continued: "We are pleased to see the continued fall in the Red Flag Index. However, more than half of cases are still showing warning signs that could indicate a scam, or at the very least, the potential for poor member outcomes.

"Our scam protection service is identifying many cases which are described as being ‘poor practice’ in the new FCA guidance.

"We are also seeing that the additional disclosure requirements introduced last year are not being met by some advisors, and we hope that this guidance will help to increase standards.”

XPS Pensions Group partner, Mark Barlow, added: “The joint guide from the Financial Conduct Authority and TPR provides welcome clarity for the many schemes who want to help their members when they’re considering a life-changing decision like whether to transfer their pension.

“It is particularly helpful to see the guide acknowledging the valuable role that employers and trustees can play in supporting members in accessing high quality financial advice.”

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