According to our latest research, almost three quarters (72%) of respondents are not confident the new regulations will, over time, reduce the number of scam victims. In fact 25% believe it will inevitably have no impact at all.

In an effort to prevent pension scams, the Government has implemented new regulations which require trustees to assess whether a pension transfer request meets certain criteria. The majority (76%) of the respondents believe they are ready for new pension transfer regulations from the Department for Work and Pensions (DWP), however, only 24% have been familiarising themselves with the changes since they came into force in November 2021.

Several weeks after the regulations took effect, it is evident that there is a lack of consistency in knowledge and understanding across pension schemes and trustees. Around one in five respondents to BW’s survey stated that they do not know where to start looking for relevant information. 

Alongside the uncertainty around retrieving information and guidance, all respondents (100%) are concerned about at least one obstacle to putting the new transfer rules into effect.  A lack of understanding of the new process (36%); having to use judgement in blocking or allowing transfers (31%); and the complexity of implementing new processes (30%) were the top three concerns. Exposure to new risks (28%), short timescales (27%) and resourcing issues (23%) were also highlighted as concerns. It is interesting to note that professional trustees are most worried about using their judgement (42%) in applying the new regulations.

"It will inevitably be disappointing to everyone with an interest in this area to see that nearly three-quarters of our respondents do not view the new regulations as likely to reduce the incidence of scams in the long term."
Liam Mayne Partner, Barnett Waddingham

Defined Contribution (DC) scheme trustees are more confident that the new regulations will make a difference (just 14% said they are “not confident” the regulations will make any difference at all), compared with 30% of trustees of Defined Benefit (DB) schemes and 43% of hybrid schemes.

Further findings from the research:

  • Only 27% of trustees are confident the regulations will reduce the number of scams.
  • Almost one third (29%) of respondents are concerned about the ambiguity between the regulations and The Pensions Regulator’s (TPR) guidance.
  • Two in five professional trustees are concerned about having to use professional judgement to potentially block transfers.

Liam Mayne, Partner at BW, said: “It will inevitably be disappointing to everyone with an interest in this area to see that nearly three-quarters of our respondents do not view the new regulations as likely to reduce the incidence of scams in the long term. 

“Previously trustees could be criticised for withholding a transfer where there had been concerns. The new guidance now provides support for doing so, albeit with little time to implement. However, what this research highlights is the need for further robust and unambiguous guidance so that scams can be effectively policed. The results show significant uncertainty – particularly around trustees’ roles and potential exposure to risk in policing pension scams.

“Although we can and do engage with trustees as their scheme administrators and advisers, ultimately, the buck stops with the trustees. Conflicting guidance, issued shortly before the regulations came into effect, has left trustees struggling to catch up.  Although many trustees say that their schemes are ready for the changes, the confidence begins to waver when we take a deeper dive into the detailed findings.

“Trustees need to sit down with their advisers to ensure that transfer processes have been updated to reflect the new requirements so that the impact on legitimate member transfer requests is minimised. A lack of a proper structure for decision-making will leave trustees with an uphill struggle - and the first step will be to ensure that trustees have sought guidance on the requirements for their scheme.

“For those trustees which have partnered with an independent financial adviser firm, a key part of that step will be to engage with the adviser firm to understand how their recommendations fit into the new framework. Whilst it is early days, we anticipate that the burden on trustees will be much reduced where they partner with an adviser firm and would encourage all trustees to consider the benefits of this in light of the new requirements.“

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