Getting the balance right on SSAS transfers

Pension scams remain a significant concern for regulators, trustees and pension providers. As the Department for Work and Pensions (DWP) considers further safeguards around pension transfers, it is important that measures designed to protect consumers do not inadvertently restrict legitimate retirement planning opportunities.

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In our response to the DWP's consultation on proposed changes to the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, we support stronger protections against fraud while highlighting the need for a proportionate, evidence-based approach to transfers into Small Self-Administered Schemes (SSASs).

As one of the UK's longest-established SSAS providers, we welcome efforts to strengthen protections against pension scams and fraudulent transfers. However, any new measures should be targeted at genuine indicators of risk and should not create unnecessary barriers for legitimate pension savers seeking to transfer into well-governed SSAS arrangements.

Why SSASs continue to play an important role

"Regulatory intervention should focus on behaviours that indicate potential scams, not on SSASs as a type of pension scheme."

SSASs continue to play a unique and valuable role for directors, family businesses and owner-managed companies. They offer flexibility, support long-term retirement planning and can facilitate investments that support wider business objectives, such as purchasing commercial property or lending to sponsoring employers within existing regulatory limits.

While the consultation highlights concerns relating to a small number of cases involving dormant SSASs, pension liberation activity and non-standard investments, these examples represent only a very small proportion of the wider SSAS market.

Regulatory intervention should focus on behaviours and circumstances that indicate potential scams, rather than on SSASs as a specific type of pension scheme.

Could the proposed employment link test create unintended barriers?

One of the key proposals would strengthen the requirement for transferring members to demonstrate an employment link with the receiving occupational pension scheme.

While we understand the rationale behind this proposal, we believe it risks creating significant unintended consequences for legitimate SSAS members.

Many SSAS members operate outside traditional employment models, making it difficult to demonstrate an employment link using conventional evidence. For example:

• Directors often remunerate themselves through dividends and irregular salary payments.
• Employer pension contributions may be paid annually rather than monthly.
• Members may remain in a SSAS after retirement.
• The sponsoring employer may have been sold or ceased trading.
• Beneficiary members may legitimately wish to consolidate pension arrangements into an existing SSAS.

In these circumstances, members could struggle to provide the evidence currently envisaged by the draft regulations despite having entirely legitimate reasons for transferring accrued pension benefits into a SSAS.

We are concerned that the proposals could hinder genuine pension consolidation while doing little to deter those intent on establishing fraudulent arrangements.

A more flexible and practical approach

"Employment status should form part of a wider risk assessment, not act as a standalone barrier to a transfer."

Rather than relying solely on conventional employment evidence, there should be greater flexibility in how an employment link can be demonstrated.

For example, Companies House records could be used to verify an individual's role as a director of the sponsoring employer where traditional payroll evidence is unavailable.

More broadly, employment status should form part of a wider risk assessment, rather than acting as a standalone determinant of whether a transfer can proceed.

This approach would provide trustees and administrators with greater flexibility while maintaining appropriate safeguards against fraud.

Focus on fraud risks, not scheme structure

In our experience, the greatest risks do not arise from SSASs themselves, but from specific behaviours and distribution channels.

We therefore encourage the DWP to focus on indicators such as:

• Unregulated introducers and lead generators.
• High-pressure sales tactics.
• Pension liberation arrangements.
• Undisclosed commission structures.
• Inappropriate or excessively high-risk investments.

These factors are far stronger indicators of potential consumer harm than the structure of the receiving pension scheme alone.

A more effective approach would be for concerns around an employment link to act as a warning sign only when accompanied by additional risk indicators.

Why clarity is needed on "reputable" pension schemes

We welcome the DWP's proposal to distinguish transfers into reputable pension schemes. However, the consultation does not currently define what constitutes a "reputable" scheme.

Without a clear definition, there is a risk of:

• Inconsistent decision-making across transferring schemes.
• Increased complaints and disputes.
• Defensive administration practices.
• Different outcomes for members presenting identical evidence.

This uncertainty could lead to poor outcomes for members seeking legitimate transfers into SSASs.

To support consistency across the industry, we believe the DWP should publish clear guidance alongside a non-exhaustive list of factors that trustees and administrators can consider when assessing whether a receiving scheme can be regarded as reputable.

Recognising the value of regulated financial advice

Greater weight should be given to transfers supported by FCA-regulated financial advisers.

Where a transfer has been recommended by an authorised adviser operating within the existing regulatory framework, this should be treated as a strong indicator that the transfer is legitimate.

Recognising regulated financial advice in this way would provide an additional layer of consumer protection while helping trustees and scheme administrators make informed and efficient decisions.

Alternative evidence for legitimate SSAS transfers

Where a member is transferring into a SSAS, practical indicators of genuine engagement with the scheme could include evidence that they:

• Act as a trustee of the SSAS.
• Are a signatory on the scheme bank account.
• Receive annual accounts or financial statements.
• Participate in investment decision-making.
• Have awareness of, and input into, the scheme's fees and charges.

Together, these factors provide evidence that a member understands the arrangement and is actively engaged in its governance.

Our key message: proportionate regulation delivers better outcomes

"The challenge is not to prevent transfers into SSASs, but to identify and stop the small number of arrangements being misused for fraudulent purposes."

We support the Government's objective of preventing pension fraud and strengthening confidence in the transfer process. However, any new transfer conditions should recognise the realities of owner-managed businesses and the legitimate role that SSASs play in retirement planning.

The challenge is not to prevent transfers into SSASs, but to identify and stop the small number of arrangements that may be misused for fraudulent purposes.

The focus should be on identifying behaviours that indicate genuine risk rather than creating barriers for members transferring into well-governed schemes. A proportionate, risk-based framework, supported by clear guidance, consistent standards and appropriate recognition of regulated financial advice, would better protect consumers while preserving access to legitimate SSAS arrangements.