Pension scams and pensions liberation remain a major issue of concern within the industry. With defined contribution members now potentially able to access large cash sums under the new flexibilities, there are further fears that scammers will target them.
The Pensions Ombudsman has issued a number of decisions relating to pension scams. These make it clear that it is essential to establish whether the member has a legal right to make a transfer. Trustees face difficult decisions where, on the face of it, the member has a legal right to transfer, but where there are other indications that a requested transfer is a form of pension liberation or scam.
In response to the situation a new industry Code of Good Practice on combatting pension scams has been published. This provides guidance on good practice for trustees when dealing with transfer requests, as well as example standard documents to use in their transfer process to enable trustees to identify possible pension scams. This guidance does not have legal force, but it pulls together the industry experience of leading pensions experts and sets out the best practice position for trustees and scheme administrators. If your scheme follows the processes in this guidance, it is much less likely to be vulnerable to a successful claim either for making a transfer, or refusing to do so.
Trustees need to remain vigilant in relation to pension scams. They should ensure that scheme administrators have appropriate procedures in place when dealing with transfer requests, including providing information to members on pension scams, and conducting the processes and due diligence recommended by the Industry Code of Practice on transfers.