Pension scams regulations questions and answers
A tougher approach to preventing pension scams
Regulations introduced by the Department for Work and Pensions in November 2021 removed a member’s statutory right to transfer their pension when a scam is suspected. Trustees, scheme administrators and providers now have the power to block a transfer if they identify certain factors which may indicate that the member may be a victim of a scam.
We have highlighted potential scams to members in the past. However, if a member was determined to transfer their pension savings, they had a right to do so, even if we warned them there was a high risk of a scam. As a result, we whole-heartedly welcome the new regulations.
A rigorous approach to due diligence
We will proceed with any transfer payments we are asked to make to prescribed public sector schemes, authorised master trusts or authorised collective defined contribution schemes. For all other transfer requests, we will carry out the necessary level of due diligence, as follows:
- We will maintain a list of schemes that we believe are suitable to accept transfers. This is described by the Pensions Regulator here as a ‘clean list’ of low-risk personal pension schemes.
- We will ask for evidence of an employment link for a transfer to an occupational scheme, or evidence of a residence link for a transfer to a qualifying recognised overseas pension scheme (QROPS).
- For a transfer to a scheme that is not on our clean list, we will ask the member for extra information to see if there are any amber flags or red flags, as defined by the Pensions Regulator. These are listed here.
- In the case of an amber flag, we will only make the transfer payment if the member supplies evidence that they have received pension safeguarding guidance from MoneyHelper.
- If we have evidence of a red flag, we will ask the trustees to decide whether we should make the transfer payment on a discretionary basis, subject to scheme rules, or not. (Please note that if a member does not supply information we have asked for, even though we send them the requisite number of reminders, it will technically count as a red flag. However, in this type of situation, we will assume the member has decided not to go ahead with the transfer, and we will not refer it to the trustees.)