More than four in five (81 per cent) amber pension transfer scam alerts raised since November 2021 have been linked to either 'unknown' categories or overseas investment concerns, according to analysis from PensionBee, which has questioned whether current scam protection measures are causing unnecessary delays for savers.

Data obtained by PensionBee through a freedom of information (FOI) request to the Money and Pensions Service (Maps) revealed that 51,417 amber flags have been raised since the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 came into force.

Of these, 46 per cent (23,542 cases) were recorded as 'unknown' or 'blank', while a further 35 per cent (18,135 cases) related to overseas investments.

In contrast, just 18 per cent (9,497 cases) related to higher-risk investments or other amber flag categories specifically set out in legislation, such as unclear fee structures.

The findings come amid ongoing industry concerns about the operation of the pension transfer regulations introduced in 2021, which require savers to attend a mandatory Pension Safeguarding Guidance (PSG) session with Maps if an amber flag is raised.

The FOI data showed that almost 53,000 PSG sessions have been delivered by Maps over the past four years.

However, PensionBee said Maps does not hold data on how many of those sessions identified a genuine scam, resulted in a referral to Action Fraud, or led to a saver being advised not to proceed with a transfer.

Consequently, PensionBee argued that the findings suggest that many transfers are being unnecessarily delayed, creating additional barriers for savers seeking to consolidate or move their pension savings.

The provider said this supports its ongoing campaign for the 10-day pension switch guarantee, which aims to reduce pension transfer times and improve the transfer experience for consumers.

In its response, the government said it recognised the importance of improving efficiency in the pension transfer system while maintaining strong protections for savers.

It added that the Department for Work and Pensions (DWP) was considering operational improvements, including the increased use of electronic processes, as well as further work on pension transfer regulations.

PensionBee chief business officer UK, Lisa Picardo, said the firm's latest findings were "difficult to defend".

"After more than 51,000 amber flags have been raised, those responsible for the implementation of the scam flag system are not clear on why almost half of the amber flags were raised, nor whether any scams were prevented," she continued.

"The cost falls on the ordinary savers trying to engage with their retirement savings - people who are trying to make better decisions about their retirement and are being forced through unnecessary bureaucratic hoops.

"What should be a simple and straightforward switch becomes a drawn-out ordeal, and that erodes trust in financial services and puts people off engaging with their retirement altogether."

Picardo warned that the current situation does not reflect the legislation's original intent.

"The government's own stated intention, when it introduced these rules in 2021, was to protect savers from scams whilst allowing the majority of transfers to proceed without undue delay.

"Its own 2023 review confirmed that is not what is happening in practice. Until the rules are tightened, providers will still treat routine transfers as potential scams, and savers will keep paying the price."

PensionBee also highlighted concerns about the overseas investment amber flag, which accounts for about 35 per cent of all cases, despite overseas investments being a standard feature of many pension schemes.

The provider said that the DWP and The Pensions Regulator (TPR) acknowledged concerns about the flag shortly after the regulations were introduced.

In its 2023 review of the transfer regulations, the DWP concluded that the overseas investment flag was not clearly defined and could be leading to unnecessary referrals to Maps.

However, PensionBee noted that a proposed consultation on the issue has yet to take place.

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