XPS Pensions Group welcomes potential changes to transfer regulations, but cautions that Trustees need to ensure they implement robust scam protection processes
XPS’s Transfer Activity Index saw a marginal increase over March 2024, to an annualised rate of 19 in every 1,000 members transferring their benefits to alternative arrangements. The trend of low transfer volumes continued throughout Q1 2024, with the Transfer Activity Index being 50% lower than this time last year. This decrease may be driven by members being deterred by lower transfer value quotes, particularly if they have previously received a much higher quotation.
XPS’s Transfer Value Index rose slightly during March 2024 to £160,000, leading to an overall decrease of ~2% over Q1 2024, primarily driven by increases in gilt yields. However, this did not offset the falls in preceding months. Although transfer values were relatively stable across Q1 2024, the March month-end value is significantly less than a year ago, when it stood at £175,000.
According to XPS’s Scam Flag Index, 88% of cases reviewed by the XPS Scam Protection Service in March 2024 raised at least one scam warning flag. This represents an increase of 1% compared to February 2024, marking the sixth successive month that the Index has remained at or below 90%. In comparison, the previous six months to March 2024 had just one instance of the index falling to 90% or below. The DWP has recently been engaging with industry bodies as it considers changes to the transfer regulations to strengthen Trustees’ ability to protect members against scams, while allowing safe transfers to be processed in a timely manner. The DWP’s changes are expected to include a removal of the overseas flag and encouraging Trustees to operate a ‘green list’ of approved service providers.
Helen Cavanagh, Head of Member Options, XPS Pensions Group, said: "In early 2024 we saw transfer values experience their most stable quarter since 2022, but values still remain ~10% lower than a year ago. Lower transfer values could be driving the Transfer Activity Index to its lowest recorded level.
Potential changes to the transfer regulations may lead the Scam Flag Index to fall in future. Changes to the regulations are welcomed but Trustees will need to continue to have a robust scam protection process in place.”
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