Scam pension transfers are unfortunately still very rife in the pension industry and have been for many years now. Scheme members are often tempted to transfer their pension savings to bogus schemes by promises of free pension reviews or early access to tax-free cash, only to find that their retirement provision has been wiped out by scammers, with no way of recovering it.
The Financial Conduct Authority (FCA) reported that over £2.2 million had been lost to pension scammers between January and May 2021, with the actual number likely being much higher. Such is the continuing high number of pension scams that Pensions Regulator (TPR) last year launched its pledge to combat pension scams campaign asking key players in the pensions industry to commit to six principles in the interests of protecting pension savings. This was then backed up by significant new legislative powers being enacted at the end of last year that enable trustees and scheme managers to refuse transfer requests where they suspect it may be a scam transfer. We take a look at these new powers and the implications of them below.
The background and statutory framework
Section 125 of the Pension Schemes Act 2021 (PSA) amends the statutory pension transfer provisions so that a statutory transfer can only take place where certain conditions are met. It also introduced an enabling power allowing secondary legislation to be passed setting out the detail of these new conditions.
