The Department for Work and Pensions has today announced the long-awaited regulations to restrict the right to transfer a pension where a scam is suspected. These are substantially different from the draft consulted on in the early summer.

Daniel Jacobson, Senior Consultant and the lead of LCP’s Pension Scams Group said:

"Trustees have historically effectively been powerless to block transfers where a scam is suspected, leaving members vulnerable to not only the risk of a loss of income in later life, but also incurring heavy tax penalties in the present day – a double financial penalty.  We welcome that the new regulations now give them back some of this power and  that the requirements will, in many cases, substantially increase the evidence and information required before a transfer can proceed. 

“However, although the Pensions Scams Industry Group (PSIG) stated that they think that 95% of transfers do not have scam risks, these new checks will still need to be applied to 100% of transfer requests in order to identify that rogue 5%.  And whilst these regulations will help protect members, there is only a three week period before they come into force. This is a small window of time for what will mean big changes in how trustees and administrators deal with scams. They will need to start working now to update their processes, procedures and communications to members. Having a paper trail of decisions and steps taken to warn members about scams will be important not just to show  Trustees and administrators are following the new rules but to help them defend their position if challenged in future.”