Pension consulting and admin firm XPS Pensions Group said transfer values fell 36% over the year.

Its Transfer Value Index fell by 4% in December as a result of significant rises in UK gilt yields.

Gilt yields climbed sharply throughout 2022, reflecting investors’ concerns about the impact of inflation on the country’s economy and the prospect of a widely predicted recession in 2023.

As transfer values fell, demand for transfers also dropped in 2022, the company said. Average transfer activity across the year was 44 members per 100,000, down from the 62 per 100,000 in 2021. 

There was also a significant increase in the number of transfers being flagged as showing potential signs of a scam. Almost nine out of ten - 87% - cases in 2022 showed scam ‘warning flags’, up from 52% the preceding year.

That was largely down to new legislation introduced in late 2021 which, among other things, required that any transfer going into a vehicle with overseas investments raises a scam warning flag.

During December 2022, at least one potential scam warning sign was identified in 93% of the cases reviewed.

Mark Barlow, head of member options, XPS Pensions Group, said: “Transfer values have plummeted over the last year, which will be a cause of concern for many. However, it’s reassuring that, as yet, we have not seen a sustained trend of more members transferring due to cost-of-living pressures.”