Higher value pension transfers a target
Men are almost twice as likely to be at serious risk of pension transfer fraud as women, according to an XPS Pensions Group report.
One-in-ten (11%) pension transfers for men were likely to raise a ‘red flag' - indicating a potential pension scam - compared to 6% of transfers for women throughout the course of 2021, according to the group's scam protection service.
Higher value pensions are much more likely to be targeted, with the average transfer value clocking in at £211,000 across 2021. The average size of a transfer demonstrating the most serious warning signs of a scam was £279,000.
XPS' scam protection service, XPS Scam Forensics, is an interactive tool that allows trustees and employers to analyse trends in the data on transfer scam flags. It enables users to monitor the prevalence of various types of scam warning signs and compare them by age, sex and size of transfer.
In total, 1,918 cases were reviewed, with half (52%) throwing up a warning flag, which indicated a possible scam.
The figures come as pension providers have started to implement new legislation from the department for work and pensions, which seeks to protect pension savers from losing their life savings in a pension scam.
Under the new rules, which came into force last November, pension providers will have the power to block transfers that demonstrate a regulatory red flag for a scam.
This could be a member receiving advice from an adviser without the correct permissions, a member requesting a transfer after unsolicited contact from a third party or a member feeling pressured to transfer.
Providers can also ‘pause' transfers which demonstrates less serious ‘amber flags' until a member is able to get additional guidance, according to XPS.
XPS' scam service considers other features of a pension transfer which are not covered by the government's guidance.
Features include: the member being told they would have to carry out another subsequent transfer after the first, possibly to a scam arrangement; the member being unaware of the identity of the adviser who has signed their transfer paperwork; and high fees, or no upfront fee, being paid to the adviser.
Helen Cavanagh, client lead for member engagement at XPS Pensions Group, said: "A lot of the red flags which we see plaguing transfers are related to advisers who do not have the correct permissions to provide such advice. It's crucial that members receive quality advice from a properly authorised, experienced advisor if they are to get the best outcomes, and schemes have an important role to play in not only providing access to that advice, but also blocking or pausing transfers they suspect may be fraudulent."
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