Almost all (97 per cent) of transfer cases reviewed by the XPS Scam Protection in June were assessed as having one or more scam warning signs, an all-time high, the XPS Pension Group’s Scam Flag Index has revealed.

According to XPS, this was primarily driven by the overseas investment amber flag required by the new transfer regulations, which was raised in 85 per cent of cases assessed.

If this particular flag were to be removed, then the number of cases where scam warning flags were identified falls to 62 per cent.

XPS Pensions Group, member engagement hub client lead, Helen Cavanaugh, commented: “The full effects of the new transfer regulations are now clear. While we support the aim of the regulations to stop pension scams, the prevalence of the overseas investment flag is causing unnecessary delays for some members.

“Whilst the government and The Pensions Regulator have recognised concerns from the industry regarding the wording of the regulations, we expect this pattern to persist unless they are revised.”

Additionally, transfer values were found to have continued their sharp fall during June, leading to a month-end average of £203,000, the lowest value seen since November 2014.

This fall is in contrast to the over £260,000 month-end average recorded at the start of the year and is thought to have been driven by continued increases in long-term gilt yields.

The pensions group also found that, following a slight increase in the number of transfer completions observed in May, the proportion of members transferring dropped to an annualised rate of 29 members per 100,000 in the latest XPS Transfer Activity Index, the lowest on record.

XPS Pensions Group head of member options, Mark Barlow, added: “Recent rises in gilt yields have seen transfer values plummet for most members. This is likely to make a transfer look less attractive and, as a result, we may see transfer activity remaining subdued for some time.”

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