DB transfer values fell from July’s record-high to levels similar to pre-lockdown in August, while the number of members asking for a transfer value also declined, according to a new report.

XPS Pensions Group’s Transfer Value Index fell consistently throughout August from £260,700 to £253,200.

The fall was mainly the result of an increase in gilt yields during the month.

Activity levels also fell and XPS’s Transfer Activity Index fell by around a third in August.

Transfer activity was at an annual equivalent of 0.67% of eligible members, down from 0.94% in July. This represents 67 in every 10,000 eligible members transferring.

As the risk of pension scams increase, XPS has launched a Red Flag Index as part of its monthly Transfer Watch tracker which measures the incidence of possible scam red flags in cases covered by their scam protection service. The firm said this will help give regular insights into activities that signal a threat.

Nicola Young, senior consultant at the XPS Pensions Group, said: “The overall incidence of red flags has been increasing over time, with around 35% of cases since July 2019 identifying at least one warning sign. However, over the months since the Covid-19 pandemic we have seen this rise to around 50% of cases.

“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 as a result of people urgently wanting to get at their savings due to current economic conditions.”

Mark Barlow, partner at the XPS Pensions Group, said: “June and July saw our Transfer Value Index reach new record highs and so it isn’t surprising that transfer values have fallen back during August. This has been accompanied by a fall in transfer activity, which maybe a result of the usual summer lull or an indication of members struggling to find firms to advise on their transfer value.”

“We welcome the inquiry into the impact of Pension Freedoms. There have been many members who have benefited from the flexibilities introduced in 2015 but there have also been many victims of unscrupulous scammers who have sought to take advantage of the changes. That is why we are also launching our Red Flag Index which will form a new part of our Transfer Watch in future.”