PSIG supports faster pension transfers requests

The Pension Scams Industry Group (PSIG), established in 2014 to help protect pension savers from fraud, deception and sharp practice, has expressed its support for the Government’s consultation on changes to pension transfer regulations. This initiative aims to make legitimate transfers quicker while reinforcing protections against potential scams. It is part of a broader endeavour to tackle pension scams and enhance the transfer process overall, with specific measures addressing the risks associated with Small Self-Administered Schemes (SSASs).

PSIG’s primary concern is ensuring a balance between reducing delays and maintaining safeguards for pension savers. The group has noted areas requiring further clarity, including the employment link warning sign, criteria for identifying lower-risk receiving schemes, and the oversight of SSAS arrangements. PSIG Chair Margaret Snowdon OBE stated, “The key challenge will be getting the balance right - removing unnecessary delays for legitimate transfers while maintaining the protections needed to prevent fraud and protect savers. Members should not face unnecessary delays when making genuine transfers, but trustees and administrators must retain the ability to identify risks and act when something does not look right."

The Chair also highlighted concerns regarding the proposed employment link warning sign, emphasising its potential ineffectiveness in its current design. She explained, “A genuine employee could trigger a warning sign because they do not meet certain salary or contribution thresholds, while someone without a genuine employment link may avoid the same scrutiny by providing only partial evidence. We recommend that a red flag should apply wherever the employment link remains unproven, whether all, some or none of the required evidence has been provided.”

While PSIG supports allowing trustees greater discretion in identifying low-risk transfers, the group insists on clearer guidelines concerning what constitutes a ‘reputable scheme’. Snowdon remarked, “Trustees should be able to carry out further due diligence where they consider it necessary, without first having to make a potentially subjective judgement about a scheme’s reputation.”

The constantly evolving nature of pension scam risks was also addressed by Snowdon, who noted the emergence of impersonation fraud, clone firms, and other sophisticated tactics employed by fraudsters. She said, “The regulatory framework needs to keep pace with these developments. The employment link alone will not address the wider vulnerabilities in the SSAS market. We support proportionate additional oversight of these arrangements, including consideration of a requirement for professional trustee involvement.”

PSIG also called for rigorous governance around lower-risk scheme lists, stressing the necessity of regular reviews and accountability. Furthermore, concerns were raised about the proposed exemption from repeat MoneyHelper guidance. Snowdon articulated the potential issues by stating, “While it may be appropriate where a member’s circumstances have not changed and the guidance remains relevant, a subsequent transfer could involve a different receiving scheme, different warning signs or a materially different level of risk. The regulations should ensure that members receive appropriate guidance and safeguards where the circumstances and risks warrant it.”

Snowdon concluded, “Ultimately, these reforms could help deliver a faster and more effective transfer process. But the test of success is not simply whether transfers happen more quickly, it is whether they can happen safely. Legitimate members should not face unnecessary barriers, but fraudsters should not be given new opportunities to exploit the system - make it easier for good transfers to proceed and harder for bad actors to succeed.”