New govt pension scam measures come into force

New measures to protect pension savers from scam transfers have come into force today, the government has confirmed.

The Department for Work and Pensions announced the new regulations earlier this month and will mean suspicious transfers can be stopped from ending up in the hands of a fraudster, with pension trustees and scheme managers given new powers to intervene.

Pension providers will now have more power to block pension transfers outright, with the ability to raise “red flags” for scams. Furthermore, where “amber flags” point to potentially suspicious activity, savers will need to take guidance from Pension Wise before transferring

Commenting on the regulations, AJ Bell head of retirement policy, Tom Selby, highlighted that if they are applied proportionately, they would hand more power to providers in blocking suspicious transfers while allowing many legitimate transfers to go through as normal.

“The one lingering concern is the extent to which all providers will apply common sense when interpreting the rules – specifically around the so-called ‘amber flag’ warnings,” Selby commented.

“Where an amber flag warning is raised, this indicates the provider believes the scheme the member wants to move their retirement pot to may be a scam. The member will then be required to obtain guidance from Pension Wise before transferring.

“Anyone who goes through this process will have their transfer slowed down significantly, which is why the government has avoided being overly specific when setting out when an amber flag should be raised.”

He added: “The government has been crystal clear that it expects providers to use their common sense when implementing its anti-scam rules.

“Despite this, there have been some suggestions pension schemes might take an overzealous approach to amber flag warnings because they are risk averse. Anyone going down this road leaves themselves open to complaints to the Ombudsman.

“While protecting members from scams is extremely important, people making legitimate transfers will not stand for unjustified delays.”

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