Transfers – top tips for trustees

New regulations (with accompanying regulatory guidance from TPR) came into force on 30 November introducing significant changes to the statutory transfer regime, to empower trustees to halt suspicious transfers. Whilst administration is clearly important to the transfer process, there is more to the new regulations than simply asking your administrators to update their transfer process.

Trustee involvement is key to the implementation of an adequate transfer process.

What should trustees be thinking about?

  • Governance: Now that the new statutory transfer regime is in place, trustees should review the governance around their transfer process. In particular, trustees should decide how they want to monitor their transfer process going forward and what reporting they will need to do so.
  • Risk management: The majority of cases will carry a low risk that they involve a scam and should be processed without delay to mitigate the risk of complaint. However, where cases are not low risk, the regulatory guidance advises “a risk-based approach to your decision-making”. In particular, trustees should think about their approach to “clean lists”(of low-risk personal pension schemes) and ensure information requested from the member is “reasonable and proportionate to the level of risk you believe may be present”. In addition, trustees will need to be prepared to justify their level of due diligence if a member complains about delays in processing their transfer request.
  • Delegation – Trustee decisions: Under the new statutory transfer process, cases may require input from trustees. For example, a trustee decision will be required to determine whether a red or amber flag is present. Trustees will need to decide who is best placed to make these decisions and what information and training they will require in order to do so.
  • Delegation – Administration: Trustees should also consider what authority their administrators have to make any decisions, whether the administrators are accountable for those decisions and when cases should be escalated to the trustees.
  • Administration: Trustees should consider how their administrators will manage transfer requests going forward and, if appropriate, review their process against the legal requirements and regulatory guidance. In particular, trustees should consider whether member communications need to be updated to align with the new statutory transfer regime.

Transfers remain a high-risk area for schemes and individuals, and an inadequate transfer process could result in severe consequences. Trustees should ensure they are pro-actively involved in the implementation of the new transfer process.

Don’t hesitate to speak with your usual Sackers contact for further information and support on the new statutory transfer regime.

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