The Department for Work and Pensions may amend defined benefit transfer scam rules so low-risk overseas investments are no longer flagged.
The Joint Committee on Statutory Instruments of the House of Commons and House of Lords warned that transfer scam rules may be capturing more transfers than needed, as some overseas investments will be low risk.
As part of regulations introduced last November, trustees can pause or block pension transfers if they deem it necessary, by raising a ‘red flag’.
In addition, they can raise an ‘amber flag’ if they suspect a potential scam, which will mean the member will have to provide evidence they have taken specific scam guidance from the Money and Pensions Service before they are allowed to transfer.
But this has resulted in many transfers being delayed.
Under the rules, an amber flag is raised where the trustees of the transferring scheme decide that there are overseas investments included in the receiving scheme.
But given that most schemes include overseas investments, the committee said this could result in a very large number of pension savers being required to take scams specific guidance from Maps before the transfer proceeds.
The DWP told the committee it is not the intention of the regulations to capture circumstances where there is in fact a low risk of a scam.
But the DWP…
