There has been a joint statement from DWP and TPR today following Pension Bee’s protest that some providers were hiding behind anti-scam regulations rather than pay transfers from their schemes in a timely way.
You can read the statement here
Edited highlight
Most pension transfers are legitimate and can proceed with minimum intervention. The legislation should have no impact on the process for transfers that, prior to the introduction of the regulations, would have caused no concern.
The Pensions Regulator has issued some updated guidance:
You can read the updated guidance here
Edited highlights
Red flag 5: The member has been offered an incentive to make the transfer. You may decide that this flag is present if the member was incentivised to make the transfer. The regulations provide examples of what is and is not an “incentive” for the purpose of the regulations. These examples are non-exhaustive lists, and where a particular incentive is not included in either of these lists, we expect trustees to assess whether the type of incentive offered is one which indicates there is a heightened risk that the transfer might lead to a member being scammed.
As the examples are not exhaustive, it is important that you keep up to date with current and evolving scam tactics and consider industry good practice. You may be faced with other examples of incentives being offered. Some could be considered normal industry practices.
After carrying out due diligence you may consider the transfer is at a low risk of a scam and, where your scheme rules allow, you may consider granting a discretionary transfer.
Amber flag 6: Overseas investments are included in the scheme The specific concern here is not whether the investment is in, for example, a global equity fund but whether the investment is in assets or funds where there is a lax, or non-existent, regulatory environment or in jurisdictions which allow opaque corporate structures.
After carrying out due diligence you may consider the transfer is at a low risk of a scam and, where your scheme rules allow, you may consider granting a discretionary transfer.
Some overseas advisers recommend members invest their pension funds in an offshore investment bond in an international self-invested personal pension. The FCA has warned that this may expose members to high or unnecessary charges and has stated that the tax benefits of such arrangements are redundant for a member investing in a UK personal pension.
A return to common sense
A group of lawyers determined that Pension Bee’s “refer a friend” promotion was an incentive. Doubt was cast by MaPs that the Pension Bee Global Equity Funds administered by State Street . LGIM and BlackRock might be falling foul of the overseas investment rules.
This guidance makes it clear that some incentives are normal industry practice. The Pension Bee incentive falls into this category as is made clear in this morning’s blog.
This link takes you to the 40 best refer a friend schemes around – sounds like normal industry practice to me.
This guidance makes it clear that Pension Bee clients should not have been sent to MaPs for guidance after selecting a global equity fund.
The guidance makes it clear that trustees should use common sense to determine the difference between a scam and a legitimate transfer and not hide behind legal niceties to protect themselves from imagined jeopardy.
It is good to see that the DWP and tPR can act quickly and decisively when called upon to do so in the public interest. We should be grateful to Pensions Bee for disrupting the nonsensical advice being given to trustees and those trustees’ supine acceptance of it.
Once again Chicken Lickin’ has been discovered and outed.
