MP questions approval process for pension transfers

MP questions approval process for pension transfers

Pension scheme trustees should be allowed to veto a transfer, according to the chairman of the work and pensions select committee.

Stephen Timms said it was “a very strange thing” for the law to require trustees to approve transfers, even when the destination scheme is included on the Financial Conduct Authority’s warning list.

Speaking on to FTAdviser's sister publication Pensions Expert, Mr Timms said: "If the FCA is sufficiently worried about this to warn people, it seems to me that trustees not only should not be required to make the transfer, they should be obliged not to make the transfer.

"I would hope we can come up with some arrangement that means, in effect, that if something is on the FCA’s warning list, then that transfer should not go ahead."

The Labour MP welcomed the government’s commitment to legislate on the back of the Pension Schemes Act to tackle the issues around transfers, and said the pensions minister expects those regulations to take effect in September or October this year.

Timms also criticised the “fragmented nature” of the way pension scams are handled. 

At present, the bodies that can be involved in the reporting and handling of scams include the Pensions Regulator, the FCA, the Insolvency Service, HM Revenue & Customs, the Information Commissioner’s Office, the Police Service, the Serious Fraud Office, as well as Action Fraud and the Pensions Ombudsman.

Timms quoted a serious fraud investigator who had said that there are so many regulatory bodies, criminals can make use of the “greyness” in figuring out the next scam.

“There’s a lot of confusion about who you go to, what happens when you’ve gone to them… All these issues need some clarification,” he said, citing industry participants who had told the inquiry that the arrangements for them to share information about fraud are inadequate.

To listen to the podcast episode in its entirety, click here.

Benjamin Mercer is a reporter at FTAdviser's sister publication Pensions Expert