TPR publishes trustee guidance on halting suspicious pension transfers

The Pensions Regulator (TPR) has published guidance for trustees to help them understand their new powers in halting suspicious pension transfers.

The guidance details what information the trustee needs to collect about the transferring member, the receiving scheme, and any financial adviser or other individual involved in the transfer.

It then outlines how trustees are expected to carry out their due diligence with a series of checks to determine which conditions apply to the transfer and whether they can then proceed.

The regulations were brought in by the Pension Schemes Act 2021, with a system of red and amber flags introduced to allow trustees to refuse transfers if there is a heightened risk of scams.

TPR’s guidance details some of the factors that trustees should consider when assessing whether the transfer shows signs of red or amber flags.

If a trustee decides there are any red flags, they must refuse the transfer. If there are any amber flags present, trustees should direct the transferring member to book a session with MoneyHelper.

Trustees should also inform members of progress throughout the transfer process, TPR noted.

Included in the guidance is a ‘Transfer progress decision tree’, a diagram that shows trustees a step-by-step guide of how to handle a transfer request in regard to the new regulations.

Both the regulations and guidance were drafted in co-operation with the Department for Work and Pensions (DWP), TPR, the Money and Pensions Service (Maps) and the Pension Scams Industry Group (PSIG).

“We welcome these new regulations which further empower trustees to act as the first line of defence against scammers,” stated TPR executive director of frontline regulation, Nicola Parish.

“We are pleased these new rules enshrine in legislation two of the key parts of the pledge to combat pension scams – around due diligence measures and issuing members warnings of high-risk transfers.

“We urge all trustees and pension providers to take note of these new rules and continue to play their part in stopping scams. This includes reporting all suspected scams to Action Fraud, or by calling 101 in Scotland.

"The pension industry can continue to demonstrate its commitment to stopping the scourge of scammers by joining our pledge campaign.”

PSIG chair, Margaret Snowdon, added: “PSIG welcomes TPR's new guidance for trustees on changes to transfer regulations.

“We were pleased to work closely with TPR and DWP to deliver the changes we called for and we now urge the industry to apply the new conditions for the statutory right to transfer in order to safeguard members' benefits.

“Schemes that already carry out due diligence checks and maintain clean lists of transfers destinations should be well prepared for the new rules and the majority of transfers should proceed without delay – the purpose of the changes is to allow trustees to say no when faced with scam signs.

“PSIG is working on a revised version of its Scams Code, which we will publish later in the year, to give practical help on how to use the new rules.”

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