The Pensions Regulator (TPR) has today published guidance helping trustees understand their new powers to halt suspicious transfers.
The regulations, arising from the Pension Schemes Act 2021, introduce a system of red and amber flags, giving trustees the power to refuse transfers where there’s a heightened risk it may be part of a scam.
Both the regulations and guidance were drafted with close co-operation between the Department for Work and Pensions (DWP), TPR, the Money and Pensions Service (MaPS) and the Pension Scams Industry Group (PSIG).
Most pension transfers are legitimate and can proceed with minimum intervention. However, PSIG estimates 5% of all transfer requests give trustees and scheme managers cause for concern.
Nicola Parish, TPR’s Executive Director of Frontline Regulation, said: “We welcome these new regulations which further empower trustees to act as the first line of defence against scammers.
“We are pleased these new rules enshrine in legislation two of the key parts of the pledge to combat pension scams – around due diligence measures and issuing members warnings of high-risk transfers.
“We urge all trustees and pension providers to take note of these new rules and continue to play their part in stopping scams. This includes reporting all suspected scams to Action Fraud, or by calling 101 in Scotland.
“The pension industry can continue to demonstrate its commitment to stopping the scourge of scammers by joining our pledge campaign.”
Margaret Snowdon, Chair of PSIG, added: “PSIG welcomes TPR’s new guidance for trustees on changes to transfer regulations.
“We were pleased to work closely with TPR and DWP to deliver the changes we called for and we now urge the industry to apply the new conditions for the statutory right to transfer in order to safeguard members’ benefits.
“Schemes that already carry out due diligence checks and maintain clean lists of transfers destinations should be well prepared for the new rules and the majority of transfers should proceed without delay – the purpose of the changes is to allow trustees to say no when faced with scam signs.
“PSIG is working on a revised version of its Scams Code, which we will publish later in the year, to give practical help on how to use the new rules.”