Pension scam regulations

The Government has introduced regulations to give pension schemes greater power to stop a pension transfer where there are indications it could be part of a scam.
 

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• Background to the legislation
• The impact on transfers out
• The impact on transfers in

The pensions industry has increasingly become concerned about the amount of money being lost to pension scams. Therefore, the Government introduced regulations, effective from 30 November 2021, to give pension schemes greater power to stop a pension transfer where there are indications it could be part of a scam. The regulations require ceding schemes to perform additional checks when a transfer out is requested and gives them the power to refuse a transfer out in certain circumstances.

When we receive a request from a pension provider to transfer out a pension, there are some additional checks we need to incorporate:

• Check if the transfer is to an acceptable pension scheme
  • If the scheme is on our ‘scam safe list’ of known schemes that have already been checked, then the transfer proceeds as normal
• If the pension scheme is not on the ‘safe list’, then we may send a letter out directly to the client asking for some further information (regulations specify this information must be provided directly from the client)
  • If the transfer is to an occupational scheme, we may ask for evidence of an employment link (such as a letter from the client’s employer and evidence of contributions being paid)
  • If the transfer is to a qualifying recognised overseas pension scheme (QROPS), we may ask for evidence of residency in the country concerned (such as formal residency documentation and two other forms of evidence such as utility bills, driving licence, etc.)
  • We may ask other questions to establish whether there are any ‘amber’ or ‘red’ flags, as per the regulations
• Depending on the questions/checks for flags, either:
  • The transfer may proceed, or
  • An ‘amber’ flag is present and we are required to direct the client to MoneyHelper to receive guidance on Pension Safeguarding before the transfer can be processed, or
  • A ‘red’ flag is present and we can refuse the transfer
• This extra stage of due diligence may cause a delay for the minority of cases.

These checks apply to all transfers – both cash transfers and re-registrations – and for clients with and without advisers, and with workplace pensions.

For transfers in, we assume most other schemes will have Fidelity on their ‘safe list’ and so the majority of transfers to us should proceed as normal. In the unlikely event that we find a pension scheme has delayed a transfer to ask a client questions, then we will endeavour to provide the information they need to get us on their ‘safe list’ for future transfers. This may cause a delay for a minority of cases.