There has been a significant increase in the number of 'red flags' reported on pension transfers in the last 12 months by the XPS Pensions Group, which it said leaves millions of pounds at risk.
Between June 2018 and June 2019, the number of red flags reported by XPS's scam identification team almost tripled. In June 2018 the team found warning signs of scam activity every one-in-eight (13%) cases, which rose to one-in-three (34%) in the current climate.
The reported scam activity represented £73m of member's pensions savings during the past 12 months.
XPS said the increased reporting of so-called ‘red flags' showed scam awareness is improving. The pensions consultancy firm said talking directly to a scheme members about their transfers increases the likelihood of finding red flags.
In the last 12 months, XPS found members are most likely to get confused about fees, the adviser process and misunderstand the transfer process on the whole. The consultancy said each of those misunderstandings could be considered warning signs of scam activity.
In most cases so-called 'red flags' do not turn out to be scams, said XPS, but that an increased recognition of warning signs is a positive step forward.
XPS Pensions Group principal Wayne Segers said: "Over the last year we have seen a big increase in the number of warning signs being identified for potential scam activity on pension transfers, from one in eight in June 2018 to one in three in June 2019.
"Fortunately, not all turn out to be scams, but it is good to see an increased understanding of the warning signs. Our scam identification team identified the red flags by speaking directly to members, which is a key part of the data gathering process."
Tool used in place of triage