PensionBee accuses several pension providers of abusing new transfer rules

PensionBee has written to Pensions Minister, Guy Opperman, accusing several pension providers of abusing new pension legislation to block or delay consumers from moving their pensions.

In the letter, PensionBee stated that the regulations appear to have been misused in a “variety of inventive ways”, including adding new “obstructive steps” to the transfer process to freeze “legitimate” transfers.

Providers reported to the Department for Work and Pensions include The People’s Pension (TPP), Creative Pensions Trust, HS Admin, Cushon, Workers Pension Trust, XPS and Railpen.

PensionBee claimed that individuals have been presented with a variety of reasons for transfer delays, including concerns about international investments and routine rewards of a modest monetary value.

It added that some consumers had noted that investments in US indices, such as the S&P 500, may be triggering the delays.

In response to the accusations, some providers have noted that their lawyers have advised that some of PensionBee’s marketing initiatives fall within the meaning of an ‘incentive’ under the new regulations, which state that any transfer that has been incentivised cannot proceed as a statutory transfer.

The regulations in question was introduced in November 2021, and enable providers to flag transfers that showed signs of a potential scam and block them on the basis of listed criteria.

“It’s appalling to see pension schemes abuse regulations to prevent savers from moving their retirement savings to their provider of choice,” commented PensionBee CEO, Romi Savova.

“This type of behaviour is unacceptable for any institution, but particularly for companies that have been entrusted with savers’ hard-earned pension savings.

“Providers cannot hide behind new legislation to justify the disappointing rise in pension transfer times and must remember the impact their decisions have on the consumers they are meant to serve.

“It is time for regulators to take pension transfer times seriously and introduce a 10-day pension switch guarantee, a time frame the ombudsman is independently enforcing.”

Commenting in response to the letter, a Cushon Master Trust spokesperson for the trustees said: “The trustees are obliged to comply with the Occupational and Personal Pension Scheme (Conditions for Transfers) Regulations 2021, which are there to protect members. The regulations are clear that an incentive to transfer is a red flag and where an incentive has been given, a statutory transfer cannot be permitted.

“Our legal advisers have instructed us that PensionBee’s ‘refer a friend’ scheme constitutes an incentive which means that we cannot permit a statutory transfer. Under our scheme deeds and rules we are able to allow non-statutory transfers, but in these instances the trustees are required to apply more stringent checks and follow more robust processes to ensure members’ interests are protected.

“The trustees have also written to the Minister of Pensions and Financial Inclusion to request clarification on the regulations in light of the legal advice we have received. We are awaiting a response.”

Arc Pensions Law (Cushon trustees’ legal advisers) managing partner, Rosalind Connor, added that the regulations have caused a lot of challenges for schemes.

“Although they are aiming to deal with a serious issue – the ongoing pensions scams risk – their reach is much broader than that,” she said.

“The problem is that a red flag, such as an incentive, doesn’t just take away the right of a member to demand a statutory transfer, but also the ability of a pension scheme to make one. The legislation is clear, and the market has to live with that unless and until the regulations are changed.”

Adding to this, a B&CE, provider of TPP, spokesperson said: “Our lawyers have instructed that some of PensionBee’s marketing initiatives fall outside of the new regulations. The regulations' broad reference to ‘incentives’ means that any transfer which has been incentivised cannot proceed as a statutory transfer.

“We believe we are one of a number of providers to receive advice similar to this, and while we appreciate that the legislation may not match the policy intent, our trustee must apply the law as it stands.

“We have been in contact with PensionBee to find a way forward in the best interest of our members who wish to transfer, and we have taken a number of steps to explore alternatives. The additional checks we are having to undertake in no way prevent our members from transferring their funds.”

XPS Administration managing director, David Watkins, stated: “I can unequivocally confirm that XPS Pensions Group is not hiding behind regulations to unnecessarily delay transfers.

“The regulations which came into force last year are about protecting members from the ever-increasing prevalence of scams. While they are a solid foundation, there is widespread recognition amongst the industry that they are not perfect and that there are some issues still to be resolved. We are actively working with government and industry partners to seek a change in the regulations that would make routine transfers operate more smoothly.

“Until those amendments are made, we will continue to abide by the regulations as they are written, taking into account legal advice we have received on how we approach transfers. XPS Pensions Group will always prioritise the safeguarding of members’ savings over commercial considerations.”

Creative Benefits managing director, David White, noted that it was “important to be clear that no transfers are being blocked”.

“Our trustees have had to put some extra steps into the transfer process to ensure that we follow the appropriate legislation and guidance where a transfer is provoked by an incentive, as is the case with the PensionBee transfer requests,” he continued.

“We hope it’s not too frustrating for pension scheme members but I’m sure they’ll understand our need to comply with the legislation and guidance.”

A Railpen spokesperson added: “In November, following the introduction of new regulations, Railpen adapted its approach to member transfer requests. Our new approach ensures we are acting in accordance with regulations whilst providing greater protection for members. It includes additional steps to ensure members are aware of the risks of transferring and checklists to help us identify any flags which might cause concerns over scams.

“Our primary aim is to protect our members, and whilst we understand that these steps have added some time to the transfer process, we are focused on keeping our members, and their money, safe. We have introduced extra support for members as part of our transfer process, with signposting as well as informing them of the additional steps and likely time to completion in order to manage expectations.”

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