We’re also taking this opportunity to remind everyone of DWP’s response to the public consultation regarding these regulations and TPR’s guidance.
Throughout the development of the regulations, we were told that trustees and scheme managers wanted the ability to act when their due diligence gave them cause for concern. The regulations are therefore designed to capture the practices used by scammers and allow trustees to refuse to make a transfer where they believe the receiving scheme is likely to put the member at risk of falling victim to a scam.
The regulations are not intended to impose additional burdens on schemes or administrators, or to impact on standard business practices. Likewise, they are not designed to offer protection against normal market volatility.
Most pension transfers are legitimate and can proceed with minimum intervention. The legislation should have no impact on the process for transfers that, prior to the introduction of the regulations, would have caused no concern. The government remains committed to individuals being able to make decisions about their pension pots but wants to enable trustees to play their part in preventing members from being scammed.
Nonetheless, we understand that concerns have been expressed about applying the regulations where overseas investments or small-scale incentives feature in the transfer. To address this, TPR has made changes to its guidance and the DWP will consider further as it takes forward its review of the regulations. The DWP committed to a review of the regulations and to publish a report within 18 months of them going live. This work is currently underway.
As a reminder, trustees should take a risk-based approach to their decision-making. Where a transfer causes no concern, which should be the vast majority of cases, they should proceed with no further action required. Where trustees believe the regulations mean there is no statutory right to transfer but they have concluded following due diligence that the transfer is at low risk of a scam, trustees can grant a ‘discretionary transfer’ where scheme rules allow.
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