Can Trustees, SIPPS and lawyers provide DWP with agreed rules on DC transfers?

Six years ago, no-one had heard of PensionBee; it was a start-up operating out of a serviced office in the Borough with a handful of staff, a scanner and some very good coders who knew their way around Salesforce. Rather than employ third party administrators, Pension Bee taught its customers to manage their own accounts, training administrators (known as Beekeepers) to support its clients using its website on PCs , laptops and phones.

It talked a different language to other SIPPs, focusing on making people confident in future-proofing their retirement, they advertised happiness not wealth and relied on their customers to tell the story.

In doing this, they became extremely successful. In 2020, the BBC ran a story on its CEO – Romi Savova, headlined “The woman who wants everyone to get a pension

Pension Bee listed on the London Stock Exchange within five years of opening their doors. IT y quickly graduated to a prime listing.

Their name is known to the general public through advertising campaigns that touch all of our lives, whether we are watch TV or you tube , ride public transport or simply browse the internet. For many people, PensionBee is the acceptable face of retirement savings.

It’s proposition is simple. PensionBee offered a savings plan for those – typically the self-employed – who did not have a workplace pension and an alternative to workplace pensions for people who wanted what Australians call “self-managed accounts”. The attraction is not sophisticated, Pension Bee only offers a small range of passive funds but these include options for muslims and for people who choose to have their money managed without profiting from fossil fuels. Its fund range is driven by demand, fed back to it by the Beekeepers.

The charges on its funds are more expensive than can be found where employers drive good deals from master trusts or subsidise investment or administrative costs. Charges reduce as balances increase as is common in retail financial services.

The charges are clearly displayed and there is no attempt to compete on price. Pension Bee competes on service and it offers retirement options that many workplace pensions don’t. Many older savers use Pension Bee as a place to organise their drawdown.

Pension Bee’s new business comes from people who make unadvised transfers, often  from trust based multi-employer workplace pensions (master trusts). Money flowed to Pension Bee through the Origo clearing hub without impediment.

Provider Number of transfers previously completed without obstruction
B&CE, The People’s Pension 17,882
Creative Pensions Trust/HS  Admin/Cushon/Workers Pension Trust 1,166
XPS 164

But in November 2021, this changed. New legislation was introduced  designed to protect those transferring pension rights from pot to pot from being scammed. Trustees were required to warn people of dangers of transferring to various providers. Pension Bee was singled out by some providers as a “risk” , principally those listed above.

Savers lost the right to switch to Pension Bee from these providers without obstruction and pension transfer times doubled as many potential savers were shown red and amber flags.  The flags suggested that a switch to PensionBee was potentially a dangerous activity for various reasons.

These reasons included an accusation that PensionBee was incentivising transfers through cashback offers – such as this.

The £50 contribution was earned when the first contribution was received. This might be a transfer but might be from the customer’s bank account. “Refer a friend” deals are standard practice – this link takes you to the best 40 on offer in financial services.

Despite this, Pension Bee’s refer a friend scheme has been declared an inducement that fell foul of the new transfer regulations (as interpreted by a group of pension lawyers advising a group of master trusts). In my opinion, this interpretation is open to challenge. It has not been adopted by the majority of pension providers , it has been adopted by trustees and administrators of the schemes in the table above.

There were also suggestions that the global equity offered by Pension Bee were unauthorised – a groundless suggestion. Criticism has been levelled at PensionBee for transferring people into higher charging funds and for offering an option to opt-out of the safeguarding service offered by the Beekeepers providing guidance on protected rights from the previous scheme. This criticism ignores the fact that most of PensionBee’s competitors don’t provide safeguarding guidance at all – as indicated in their Terms and Conditions. The people at  PensionBee feel they are being unfairly singled out for criticism.

For their part, these master trusts claimed that they had no option to advise members seeking to switch to PensionBee of the dangers of doing so, because of the advice given to them by their lawyers. Flags are being thrown, members have to be interviewed by Moneyhelper , transfer times have increased and many consumers are frustrated.

This week, PensionBee wrote to the Pensions Minister complaining that the trustees of the schemes listed above were obstructing the free-flow of money to them for spurious reasons. People’s Pension issued a press release saying it was only following the law. Social media hummed with outrage that trustees and lawyers were being criticised.

Within 48 hours of this letter being received the DWP and the Pensions Regulator issued a statement , encouraging trustees to process transfers wherever possible without impediment. This was picked up by the press as an indication that regulations would be amended to remove obstructions.

This has already met with the disapproval of many trustees and administrators including Andrew Warwick-Thompson who is both a trustee of Cushon and a former Executive of tPR with responsibility for Defined Contribution pensions.

He posted last night in response on Linked in.

Alan Chaplin A completely unhelpful statement!

“Where trustees believe the regulations mean there is no statutory right to transfer but they have concluded following due diligence that the transfer is at low risk of a scam, trustees can grant a ‘discretionary transfer’ where scheme rules allow.”

Which is exactly what the Trustees of the Cushon Master Trust (and many others) are doing – except the correct terminology is a “non-statutory” transfer – which requires a) the appropriate powers under the trust deed and rules and b) the member to sign a non-statutory transfer discharge form.

So, we are in the same position we were when I first posted about this earlier today – “There are two possible solutions, which are not mutually exclusive: either the Department for Work and Pensions (DWP) should fix the drafting; and/or providers should stop offering transfer incentives.”

Meanwhile, PensionBee issued a further statement welcoming the position adopted by DWP and TPR and calling on the trustees of schemes obstructing transfers to revert to the free-flow position which existed prior to last November

“We are heartened to see the DWP and TPR’s joint commitment to pension savers’ switching rights.

Pension providers have been put on notice: routine pension transfers can and should go ahead promptly.

It now remains to be seen whether – despite the explicit and unambiguous announcement that 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 handful of pension providers intent on delaying transfers will continue to frustrate consumers from moving their own money.

Should these practices continue, we would call on regulators to end the pension transfer lottery once and for all: by legislating for a pension switch guarantee.”

A constructive way forward.

Six years ago, no one had heard of Pension Bee, but now they are driving change and championing the rights of consumers to do as they please with their pension rights. Some are arguing this is a “PR stunt” but I think it’s more than that. Consumer choice, competition and the proper use of the pension dashboards are high on the public and political agenda.

By taking on the powerful pension lawyers and the trustees of several big master trusts, they have highlighted a problem that impacts transfers not just to PensionBee but any other SIPP that is deemed to be a potential scammer by the lawyers. As almost all non-advised SIPPs offer overseas funds and incentivise referrals , this potentially includes a range of household names such as Hargreaves Lansdown and AJ Bell.

It remains to be seen, whether the trustees of the firms throwing flags at transfers to FCA regulated UK SIPPs, will look again at the advice they are given, or whether they will demand that the SIPPS change their marketing or the DWP amend its regulation.

I hope that in time, the regulations will be amended as everyone agrees that they are badly drafted.  In the meantime, there is an opportunity to stop throwing flags and annoying consumers.

There’s no doubt that the trustees in question are acting under legal advice , but that advice is there to be challenged and I hope it will be.

And it seems reasonable that PensionBee and the trustees of Cushon, Peoples Pension and RPMI get round a table with the lawyers and present a solution to the Pensions Minister – to conclude this matter  amicably by providing an acceptable draft of amendments.

If this can be achieved amicably and with consensus between parties, good will have come out of this.

We don’t need of a new Act, compelling trustees to comply with the intent of tPR/DWP . We need a competitive pension system where savers are free to make reasonable choices without fear or hindrance.


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Can Trustees, SIPPS and lawyers provide DWP with agreed rules on DC transfers?

  1. Martin T says:

    One solution would be for the law to have a minor amendment to include in the “first condition” schemes list (currently public sector, authorised master trust, authorised cdc) a government maintained list of schemes deemed low risk.

    I doubt this will happen as it means government taking the risk away from trustees, reversing the policy trend of many years.

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