According to the Financial Conduct Authority, a total of £2.2m worth of pension scam losses has been reported to Action Fraud since the start of 2021 (between January and May).
In a further effort to prevent pension scams, the new regulations will require checks to assess whether a pension transfer request meets certain conditions to enable a statutory right to transfer.
The regulations will empower trustees and scheme managers to prevent a transfer request when a ‘red flag’ is present; for example, if a scheme member requests a transfer after receiving unsolicited contact or has been offered an incentive to transfer.
If trustees are only considering the flags in the regulations, then they may miss other scam warning signs
In instances of any ‘amber flags’, such as investments that would normally only be offered to sophisticated investors, a member must obtain guidance from the government’s MoneyHelper service before the transfer may go ahead.
Differences of opinion
The Department for Work and Pensions reported concerns from consultation respondents that savers may feel inconvenienced if they have to obtain guidance after having already taken advice.
However, the department says it believes that the requirement should be retained. “Financial advice provides an invaluable service for pension savers through formal recommendations on how to use savings to achieve the retirement envisaged, especially the…