From 30 November 2021 new regulations come into force that will provide trustees and scheme managers with the power to refuse a statutory transfer where they consider there is a risk that the transfer is part of a pensions scam.

The new regulations set out a two-condition test for trustees or managers to follow when assessing the scam risk of a statutory transfer request.

First condition

The first condition is the lower risk test. This requires trustees or scheme managers to be satisfied beyond reasonable doubt that the proposed receiving scheme is:

  • a public service pension scheme;
  • an authorised master trust; or
  • an authorised collective defined contribution scheme (CDC).

If any of these conditions are satisfied the due-diligence exercise required of trustees or scheme managers is slimmed down significantly in that they only need to request enough information to enable them to identify the correct scheme (whilst exercising caution that the receiving scheme is not a clone scheme).

Second condition

The second condition applies to all other transfers which do not fall under the first condition and is further broken down into two types of transfers:

  • Type 1: transfers to an occupational pension scheme or a QROPS where enough due diligence has been carried out and no red or amber flags have arisen. Type 1 transfers can (and indeed should) be approved by trustees or scheme managers; and
  • Type 2: transfers where additional due diligence is required to comply with the regulations…

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