Background
On 9 June 2026, the DWP published a consultation on proposals to amend the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 (the “Regulations”).
In this response
Responses to specific consultation questions
Question 1: Do you foresee any issues with the planned wording of the flag in regulation 8 of Annex A?
The proposed wording for regulation 8(5)(e) states:
“(e) the member has provided all the evidence required by regulation 10(1)(a) or (c) to demonstrate the employment link but the evidence does not demonstrate the employment link between the member and the receiving scheme.” (our emphasis)
We are concerned that this wording doesn’t capture situations where the individual has only provided part of the evidence required. Where the evidence doesn’t amount to a “substantive response”, this will be treated as a red flag under existing regulation 8(4)(a), but there would be a gap where there was a “substantive response” but it is not “all” of the evidence required. Given this, we suggest revising new sub-section (e) as follows:
“(e) the member has provided a substantive response to a request for evidence made in accordance with regulation 10(1)(a) or (c) but the evidence provided does not demonstrate the employment link between the member and the receiving scheme for the purposes of regulation 11(1).”
Question 2: Are you aware of any emerging concerns, risks or scam activity, such as those arising in SSASs or other pension arrangements, where existing consumer protections or regulatory safeguards may not be sufficient?
In our experience, the drafting of the red flag relating to unsolicited contact restricts its usage. Under regulation 8(5)(b), unsolicited contact is only a red flag if the contact is made “for the purpose of direct marketing of the transfer”. However, we are aware of at least two schemes where members have received unsolicited contact about their pension arrangements more generally. This generic contact is then followed up by further contact specifically about a transfer. As the second contact is not unsolicited, this scenario isn’t caught by regulation 8(5)(b) but is of clear concern to the trustees.
There is also an issue with how the red flag relating to someone carrying out a regulated activity without the right regulatory status (regulation 8(5)(a)) operates in relation to overseas transfers. Where a transfer has an overseas element, a member will often take advice from both a UK based FCA-regulated adviser and an overseas financial adviser. Despite TPR guidance and FCA guidance in this area, it is often difficult for the trustees to work out which adviser provided regulated advice and, as a result, whether the red flag is present (ie whether the unregulated adviser advised on the transfer). This could leave certain members at risk.
Question 3: Do you consider the focus on the employment link to be an appropriate and effective measure for addressing the concerns relating to SSAS transfers?
Yes, subject to our point below, we feel linking the red flag to providing employment evidence is a useful way to approach this. The employment link test is less subjective than some of the other options, which we expect trustees will welcome.
We wanted to remind the DWP of the decision in Hughes v The Royal London Mutual Insurance Society Limited [2016] EWHC 319 (Ch). Ms Hughes wished to transfer to a SSAS but was initially found not to be an “earner” as she didn’t receive remuneration from the sponsoring employer, so the transfer was refused, and the Pensions Ombudsman agreed with this conclusion. However, the court disagreed and held that she was an earner “by reason of her earnings from another source or sources” so could transfer. This decision highlights that there may be genuine transfers to SSASs, where the remuneration structure is such that the member cannot evidence an employment link. Under the proposed changes, legitimate transfers such as these could be blocked.
Question 4: Do you agree with this proposed approach [in relation to reputable schemes], including the use of a non-exhaustive list of factors? If so, we would welcome your views on what those factors should be. We also welcome your input, including any evidence-based views, on its effectiveness and practical workability.
We welcome the introduction of the concept of a “reputable scheme”. In principle, this should simplify a significant number of transfers. However, it would be helpful to understand how the DWP envisages the process working in practice.
Central “reputable scheme” list
Before we get into the detail on the proposed process, we are aware that the DWP wants transfer processes to be “efficient”. From trustees’ perspectives, the most efficient way of managing “reputable schemes” would be for them to be defined as those named on a central, public list maintained by a body such as the DWP, TPR, or a trusted industry body, such as PSIG.
Although, we recognise the difficulties with maintaining such a list (noting those set out in paragraphs 27 to 32 of the Government’s 2021 consultation response), we would urge the DWP to consider whether there is any way this could be workable, given the burden that this will put on trustees.
Clean list or case-by-case basis?
Is the DWP expecting that trustees:
- operate a “clean list”, ie where they have identified schemes as “reputable schemes” based on publicly available information, or
- check on a case-by-case basis whether the scheme in question is a “reputable scheme”?
If the DWP is expecting the use of clean lists, then we have two main points to flag:
- not all schemes operate clean lists – while some trustees operate such lists, other schemes don’t have a sufficient number of transfer requests to make such an approach viable. This can be the case even in a large scheme. Some trustee boards have simply decided that this is not an appropriate approach for them to take on balance of risks. Expecting all trustees to take this approach (trustees will be required to assess whether a receiving scheme is reputable where other options for meeting the First Condition are not satisfied) will mean a significant undertaking for those that don’t currently operate them
- how much ongoing due diligence would be expected – once a scheme is on a trustee’s clean list, how often does the DWP expect trustees to check its reputability? Would they be expected to check on a case-by-case basis, ie with every transfer, or would the assessment be “one and done”, subject to appropriate review? If the former, we struggle to see the benefits of this new option (particularly given some of the suggested factors – see comment below). If the latter, how often would a review be expected?
If the DWP is expecting trustees to do checks on case-by-case basis, then we have concerns that this will add significant time into the transfer process (see our response to question 5 below).
Proposed factors
The factors proposed in the consultation are:
- whether there is an existing relationship with the receiving scheme
- the nature and risk profile of the scheme’s investments
- any prior warning flags or regulatory concerns
- the level of transparency around fees and charges.
We are concerned that it will be onerous for the trustees to assess these factors, and that the related investigations would overlap significantly with those required for the amber flag checks. For example, checking the “nature and risk profile of the scheme’s investments” is similar to establishing the presence of the amber flags on investments and investment structures in regulation 9(5), and the “level of transparency around fees and charges” is similar to the amber flag relating to “unclear or high fees” in regulation 9(5)(b).
It would be helpful to have further clarification of the due diligence the DWP expects trustees to carry out in respect of any “prior warning flags or regulatory concerns” – is it just to keep a record if they have had any warning flags or regulatory concerns in the past, or are they expected to see whether TPR or other schemes have had concerns? If so, how does the DWP envisage trustees will obtain this information?
Additional/alternative factors
In our view, when assessing whether a scheme is “reputable”, trustees should focus on finding whether it is operated by a household name or a well-established provider, rather than delving into its charging and investment structures. On this basis, we think drawing on the discussions in the 2021 consultation response would be a sensible starting point and suggest the following be included as relevant factors:
- schemes operated by an insurer that is registered by the Financial Conduct Authority and authorised by the Prudential Regulatory Authority
- schemes in the FTSE 100 / 250
- schemes with high (to be defined) volumes of assets under management.
Positioning these as factors for the trustees to consider when deciding whether a scheme is “reputable”, rather than rendering a scheme which has these factors as automatically a “reputable scheme”, should allay some of the concerns of providers raised in 2021, as the trustees’ lists wouldn’t need to be made public, and no liability would attach to the DWP, or any other body, as might be the case if a list were to be centrally held and maintained.
Technical comment – regulation 7(5)
Regulation 7(5) restricts the evidence or information that trustees may require from a member in determining whether the First Condition is satisfied to the details necessary for them to identify the correct receiving scheme. This will need to be extended to enable trustees to obtain sufficient information for them to determine whether a scheme is “reputable” by reference to the relevant factors.
Question 5: Do you foresee any issues in the practical implementation of the amended regulations?
We are concerned that placing the burden on trustees to identify “reputable schemes” could hold up the transfer process. If trustees are expected to identify “reputable schemes” on a case-by-case basis, this would essentially introduce a two-stage due diligence procedure. Trustees would first have to determine whether the transferring scheme is a “reputable scheme” and, if they aren’t satisfied that it is, then they will have to undertake the necessary due diligence to establish whether the Second Condition is met. How does this reconcile with the existing statutory deadlines for completing transfers, and the Government’s aim of speeding up the transfers process where possible?
Question 6: Do you foresee any issues with the proposed wording of the amendments to the regulations, as detailed in Annex A?
MaPS guidance
Our understanding is that the transfer guidance from MaPS is the same for all referrals, regardless of why an individual is referred. On this basis, and given the statistics on how few people change their minds after the guidance, the proposal to remove the MaPS guidance requirement where it has been obtained in the previous 12 months seems reasonable, even where the transfers are to different schemes, or where different amber flags are raised.
However, on a related point, given the statistics on how many individuals still proceed with a transfer after receiving MaPS guidance, we think it would be useful as part of the wider project to revisit the MaPS guidance to see whether it is delivering an appropriate message or if it should be revised/updated to provide something more bespoke. If the removal of the overseas investment flag reduces referrals (even if not to the extent expected – see below), this could create some capacity to make such an offering a real possibility.
Overseas investments
We agree with the proposal to remove the overseas investment flag, particularly as regulation 9(5) already requires trustees to assess whether the receiving scheme includes high risk or unregulated investments, or unclear, complex or unorthodox investment structures.
However, we do not anticipate that this will necessarily materially reduce referrals to MaPS. We are aware that trustees often refer individuals to MaPS guidance due to the presence of overseas investments where there may be other amber flags, but to determine whether these other flags are present would require more detailed investigation.
On a related note, it would be useful for trustees and their administrators to have more guidance on some of the more subjective amber flags, particularly given the Government’s aim of speeding up the transfers process where possible.
Incentives
We agree that the incentives flag is an important protection in relation to scams and should be retained. We also agree that the introduction of the “reputable scheme” option in the First Condition introduces helpful flexibility for trustees, potentially enabling them to transfer to a scheme which offers incentives.
