XPS Pensions Group’s transfer activity index showed an annualised rate of 50 members out of every 10,000 transferred their DB pensions in December, the lowest rate since XPS started tracking this activity in July 2018.
This was down from an annualised rate of 59 in November and 56 in October.
The value of these transfers also fell by 5 per cent (more than £12,000) in December to an average of £258,000, falling from a record high of £270,000 at the end of November.
The decrease was driven by a rebound in gilt yields over the course of December.
Mark Barlow, head of member options at XPS Pensions Group, said: “We often see a slump in transfer activity over the festive period, but this is the lowest rate of transfers we have seen since we started the index in 2018.
“Although it’s unlikely to be affecting activity significantly yet, it’s interesting that this fall comes immediately after the introduction of the new transfer regulations, which provided trustees with the power to block transfers.”
In addition, the XPS Red Flag Index remained below 50 per cent for the fourth successive month, with 41 per cent of transfers showing at least one warning sign indicative of a potential scam or poor member outcomes.
This compared to a peak of 76 per cent this time last year.
As part of regulations introduced in November, trustees are now able to pause or block pension transfers if they deem necessary, by raising a ‘red flag’.
In addition, they can raise an ‘amber flag’ if they suspect a potential scam, which will mean the member will have to provide evidence they have taken specific scam guidance from the Money and Pensions Service before they are allowed to transfer.
Helen Cavanagh, client lead at the member engagement hub at XPS Pensions, said: “Although the Scam Index remains at a high level, given all the recent focus on preventing pension scams, it’s encouraging to see a fall in the number of transfers displaying warning signs of a pension scam.
“With the new regulations in force placing more requirements on trustees, it’s important that they are able to understand the landscape of how scams might be affecting their members.”
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