The changes follow a government consultation on amendments to the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021. Under the Labour government, the DWP intends to reduce unnecessary checks on legitimate transfers while strengthening measures against pension fraud, particularly where savings are transferred into small self-administered schemes.
Pension Transfers to Reputable Schemes Will Face Fewer Checks
Under the revised regulations, pension trustees will be able to approve transfers where they are satisfied, on the balance of probabilities, that the receiving scheme is reputable. Such transfers will fall under an expanded First Condition, removing the requirement to assess red and amber scam warning flags under the Second Condition.
According to Pensions Age, the government has retained most of its original proposals despite concerns raised during the consultation. Some industry respondents questioned the use of the word “reputable”, suggesting alternatives such as “acceptable” or “trustworthy“.
The DWP has maintained its preferred terminology and will work with The Pensions Regulator (TPR) to develop a non-exhaustive list of factors trustees can consider when assessing receiving schemes.
Ben Fairhead, a partner at Arc Pensions Law, described the approach as potentially the most significant change facing pension providers. He suggested it could encourage wider use of lists identifying schemes considered suitable for transfers.
Fairhead also raised questions about whether the assessment factors would appear in legislation or regulatory guidance. He favoured guidance because it could be adapted as pension scams evolve.
The government believes the revised approach will allow pension administrators to devote more attention to transfers presenting greater potential risks, rather than carrying out the same checks on schemes already considered reputable.
New Safeguards Will Target Higher-Risk Pension Transfers
Alongside the simplified process, the DWP plans to introduce additional restrictions on transfers into small self-administered schemes (SSAS), which have been identified as presenting particular fraud risks.
A new red flag will apply where the evidence fails to demonstrate an employment connection or another relevant relationship between the transferring member and the receiving scheme.
According to the Birmingham Mail, trustees will be given information about the relationships they may consider, including arrangements involving qualifying family members and individuals holding other relevant positions.
Even where the required relationship is established, a new amber flag will require members transferring into an SSAS to attend a guidance appointment with the Money and Pensions Service (Maps).
The appointment will explain the responsibilities associated with SSAS participation, including governance requirements and potential liabilities.
The government will also remove the overseas investment amber flag, which had attracted criticism for delaying legitimate transfers involving overseas assets.
According to Pensions Age, members who have attended a safeguarding guidance appointment within the previous 12 months will generally be exempt from repeating it. SSAS transfers will remain excluded from that exemption.
The consultation cited Report Fraud figures showing average pension fraud losses of £18,400 in 2024/25, rising to £38,400 where investments were identified as the primary scam vehicle.
Pensions Minister Torsten Bell said the government was determined to prevent criminals from exploiting savers and would automatically block transfers where serious warning signs were identified.
