On the go: The Association of Consulting Actuaries has said administrators and trustees will need more time to comply with new pension scam rules being introduced by the government.
The Department for Work and Pensions published a consultation in May giving scheme trustees and scheme managers new powers that, the government said, will provide additional protection for members against scams.
Trustees will need to confirm that members have demonstrated a genuine employment link between themselves and the recipient occupational scheme.
Should they wish to transfer to a qualifying recognised overseas pension scheme for which they cannot demonstrate an employment link, members will need to show that they reside in the same financial jurisdiction as the scheme in question.
If neither of the preceding applies, then the trustee and the scheme manager should determine whether there are any 'red flags' associated with the transfers.
If there are, the transfer will not proceed. If there are not, the trustee and manager will still have to determine whether it is necessary to refer members to specific scams guidance.
In its response to the consultation that closes on Thursday, the ACA asked the DWP to ensure the new rules are accompanied by detailed guidance from the Pensions Regulator and for sufficient time to be given to administrators on behalf of their trustee clients, so they can adapt their processes to this new system.
The industry body stated that they found the “proposed system complex, with the potential to add risk to trustees of the transferring scheme”.
Furthermore, the ACA explained that it would also be useful if the Pensions Ombudsman could give a clear steer in this area given his recent determination in respect of the regulator 2013 publication of its ‘Scorpion’ scams guidance.
In May, Pensions Expert reported that the ombudsman would expect pension providers to update their transfer processes, due diligence checks and member communications within one month of the new scams regulatory guidance being issued.
The new time frame, announced in a recent decision, is significantly less than the three-month period the ombudsman had previously indicated would be acceptable.
The industry body noted that it would also be useful if the ombudsman could acknowledge, when considering any future member complaints once the new system has been introduced, “the due diligence required of trustees which may well result in the processing times being elongated”.
Patrick Bloomfield, chair of ACA, noted that “any effort to limit the opportunity for pension scams to succeed” is welcomed, and “we acknowledge that this proposed limitation on the statutory right to transfer has been a long time coming and has benefitted from the input of a number of stakeholders”.
“Nevertheless, we find the proposed system complex with the potential to add risk to trustees of transferring schemes," he added.
