Pension transfer blocking powers to be introduced in Autumn 2021

Pensions Minister, Guy Opperman, has confirmed that regulations to support pension trustees in blocking a transfer that displays pension scam red flags are expected to come into force in September or October 2021.

Speaking at a Work and Pensions Committee (WPC) session on pension scams, he clarified that the Financial Conduct Authority (FCA) warning list will not be included within the support regulations, as explained in a previous letter to the WPC chair, Stephen Timms, emphasising that this has now been addressed via “alternative means”.

He also expressed optimism around the potential impact of the regulations, stating that while “the devil is in the detail”, the measures set out in section 125 of the Pension Schemes Bill “will address, very significantly, the problem of transfers”.

Despite this however, Opperman called for the inclusion of broader Henry VIII powers, in order to avoid the lengthy process required to combat scams once they are identified.

He stated: "A key recommendation I would love is to give, in certain limited circumstances, Secretaries of State broad powers to take whatever action they need to take to combat scams.

"The problem that is repeatedly identified, is we identify a problem, cold calls is a good example, transfers is a good example, we go through a long process of consultation, legislation, secondary regulation, to deal with the problem, which takes a long time, and which there is a problem in the interim.

"The difficulty is if something pops up in the next 6-12 months that is an identifiable scam that you want me to address as minister, I have to come back and do consultation, primary legislation, and secondary regulation; because I haven't got a totally broad power."

He added: "That's a difficult one because I know particularly in the House of Lords they really deprecate Henry the VIII powers and broader powers.

"But it's a serious issue, which going forward as scammers evolve, our ability to react in a legislative way quickly is definitely hampered by the process we are in now, because we don't have that broad primary power."

In addition to this, Opperman confirmed plans to write to around 150 pension organisations in order to query why they are not sharing their data with the Pension Scams Industry Group (PSIG), emphasising that the industry needs to do a “great great deal more”.

He stated: "PSIG have done a very good job, and I think there were about 44 different organisations who were part of its data sharing, that's now up to 50.

"But the practical reality is you need around 200 of organisations that are part of the industry for their to be a real coverage of every part of that industry. In other words, you’ve got around 150 firms who are not providing their data and not contributing that data.

"Once you get over that line and you get industry data up to speed, you get Project Bloom fired up in a much better way and Action Fraud working in a better way, channelling into proper prosecutions."

He argued that more could be done with existing Action Fraud data, and that it could be shared with the industry and regulators in a better way.

Opperman also faced queries around the concerns that women's state pensions are being underpaid, initially highlighted by LCP, confirming that the analysis of records is still ongoing, and that a detailed update would be provided to the house “without a shadow of a doubt” by March.

Furthermore, he emphasised that DWP has already "quadrupled" the workforce addressing the problem, having grown its team from 37 prior to Christmas to “well over 100”.

He stated: "I can guarantee we have pretty much quadrupled the workforce, which in Covid is extraordinarily difficult, we take it very seriously and we are committed very strongly in redressing this matter."

More broadly in relation to pension credit, Opperman reiterated the recent news that the DWP is working the BBC to collaborate and improve pension credit awareness, highlighting this as a win for both the BBC, the department, and potential claimants.

Despite this however, Opperman emphasised that since its introduction, take-up of pension credit has remained low, having never surpassed 70 per cent.

“The wider issue is whether the pension credit is a functioning benefit given its take-up remains stubbornly low,” he queried.

Addressing the treatment of scam victims by HMRC, which industry experts have previously critiqued, the minister also acknowledged issues around the current “arbitrary” and inconsistent approach.

He stated: "There is a legitimate point that can be made, which can be made as an observer, and a very interested observer as Pensions Minister, which is there is a criticism HMRC is not consist in their approach.

"Now, as with all government or quasi government organisations, knowing what they are going to do in a particular circumstance is really really helpful, and them being arbitrary and not consistent is very unhelpful.

"So at the very least I would hope that there is a greater degree of consistency."

However, he also clarified that it is not something that he has met with HMRC to discuss or been updated on, emphasising that it is a matter for the Treasury to decide.

In addition to this, Opperman questioned HMRCs reasoning for not joining Project Bloom, which argued there was potential issues around taxpayer confidentiality, stating that this issue could "definitely be overcome".

More broadly, he also acknowledged that more could also be done by Project Bloom, stating that it needs to be increased in its capability, and needs greater force.

"Unquestionably we do need to do more with project bloom, but I think there is an issue as well about the nature and the difficulty of trying to action pension scams, because they are very very different in a variety of ways," he said.

During the session, the department also announced that it would undertake an investigation with TPR as to why one professional trustee firm is being awarded 80 per cent of distressed schemes.

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