The latest XPS Pension Transfer Watch report has highlighted that pension transfer volumes were 50% lower in March than a year earlier.

Transfer values showed a small increase in March but activity remains low, the pension provider reported.

The Transfer Value Index saw a decrease of about 2%, partly driven by increases in gilt yields.

The Transfer Activity Index showed a marginal increase to an annualised rate of 19 in every 1,000 members transferring their benefits to alternative arrangements.

The recent trend of low transfer volumes continued in Q1 2024, with the Transfer Activity Index 50% lower than this time last year.

The firm said the fall may be driven by pension savers being deterred by lower transfer value quotes, particularly if they have previously received a much higher quotation.

XPS’s Transfer Value Index rose slightly during March 2024 to £160,000, leading to an overall decrease of about 2% over Q1 2024. However, this did not offset the falls in preceding months.

Although transfer values were relatively stable across Q1 2024, the March month-end value was significantly less than a year ago, when it stood at £175,000.

According to XPS’s Scam Flag Index, 88% of cases reviewed by the XPS Scam Protection Service in March 2024 raised at least one scam warning flag. This represents an increase of 1% compared to February 2024, marking the sixth successive month that the Index has remained at or below 90%.

The DWP has recently been engaging with industry bodies as it considers changes to the transfer regulations to strengthen trustees’ ability to protect members against scams, while allowing safe transfers to be processed in a timely way. The DWP’s changes are expected to include a removal of the overseas flag and encouraging trustees to operate a ‘green list’ of approved service providers.

The XPS Pensions Group said it welcomed potential changes to transfer regulations but cautioned that trustees needed to ensure they implemented “robust scam protection processes.”

Helen Cavanagh, head of member options, XPS Pensions Group, said: "In early 2024 we saw transfer values experience their most stable quarter since 2022, but values still remain about 10% lower than a year ago. Lower transfer values could be driving the Transfer Activity Index to its lowest recorded level.

“Potential changes to the transfer regulations may lead the Scam Flag Index to fall in future. Changes to the regulations are welcomed but trustees will need to continue to have a robust scam protection process in place.”