The Minister for Pensions and DWP on scamming your pension

The DWP has published a consultation seeking views on a set of draft regulations concerning pension scams.

The proposed Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 would require trustees or scheme managers of occupational and personal schemes to ensure that at least one of four conditions is met before they act on a pension transfer request from a member of their scheme.

The regulations would also introduce a new red and amber flag system, allowing for transfers to be prevented or paused whilst the member takes guidance about the possibility of scams.

The proposal is that the guidance would be provided by the Money and Pensions Service.

Guy Opperman, Minister for Pensions and Financial Inclusion, said:

“Pension scammers are the lowest of the low and, with the growth in recent years of online scams, we must act now to curb them. Our new regulations will build a strong, first line of defence in the fight against pension fraud — helping stop these crooks from making off with people's hard-earned savings.”

The plans outlined by the DWP could see providers asking people transferring to a pension scheme not on a prescribed ‘safe destination’ list a series of questions to determine whether they are at risk of being scammed. This could result in significant delays to transfers and may mean some legitimate transfers to mainstream pension providers could be blocked completely if customers can’t or don’t want to answer these prescribed questions.

The existence of a ‘safe destination’ list may mislead consumers as it implies the DWP has carried out due diligence on those schemes and is endorsing them when that isn’t the case. The consultation closed on 9 June 2021.

Any steps to protect pension investors are welcome, however, the proposals have already attracted criticism from one of the leading pension scheme administration firms in the UK as 64% of potential scams identified since 2018 would have satisfied the first condition and not been subject to further investigation.

The best safeguard you can offer your clients is to engage with a trusted firm, click here to get in touch with one of our expert advisers.

The information in this article is correct as of 21/06/2021.