Pension scams: Empowering trustees and protecting members – Sackers response
The DWP’s consultation on draft regulations introducing new restrictions on statutory pension transfers closed today. The draft regulations, which are being made under a power in the Pension Schemes Act 2021, will impose conditions on a member’s right to a statutory cash equivalent transfer value (“CETV”) and will apply to both occupational and personal pension schemes. In future, at least one of four new conditions must be met for the transfer to proceed, the aim being to try to prevent transfers taking place to scam vehicles.
James Bingham, partner, comments: “Protecting members from potential exposure to pension scams is the key aim of the new regulations and one which we very much welcome. Whilst this is very positive news, there is already an array of legal requirements and industry guidance governing pensions transfers, including an industry code of practice on combatting pension scams. Adding further layers to an already heavily regulated area could be confusing for members and difficult to administer for trustees and managers (as well as those acting on their behalf). With TPR accompanying guidance on the cards, we would urge the Government to take the opportunity to clarify how the legislation and existing industry guidance fits together, and to consider providing sample wording so as to facilitate consistent member communication across all schemes regarding the supporting evidence that will be needed in future.”
“With the new requirements introducing additional hurdles to overcome before a CETV can take place, the transfer process could end up taking trustees and managers considerably longer. There is currently no suggestion that the Government is considering adjusting the overall statutory timeframe, which can be tight and may benefit from greater flexibility if the procedural burden is increased.”