According to XPS, the pensions consultancy firm, in July and August of this year 51% of pension transfers, equating to twenty five million pounds in pension savings, were flagged as at risk of a pension scam.

The number of transfers showing at least one red flag has dramatically increased during the COVID-19 pandemic. In 2016, only 13% of pensions’ transfers triggered a red flag. This figure rose to 33% at the end of June 2020 and then jumped considerably to just over half in July/August 2020.

In addition, the industry has seen a change over the past few years, in the type of ‘red flag’ triggers indicating that a pension transfer may be a scam. XPS notes that whilst the number of red flag cases relating to individuals targeted with cold calls fell from 22% in 2016 to 2% in 2020, cases of red flags concerning fees, and in particular cases of high and misunderstood fee arrangements, increased from none in 2016 to 45% in 2020.

According to Nicola Young, XPS Member Engagement Hub spokesperson, “The worrying spike in recent months is driven by a significant increase in members that have little to no understanding of fees in the arrangement they want to use to access their pension savings. This may be a result of people urgently wanting to get at their savings due to current economic conditions.”

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