UK government proposes faster route for straightforward pension transfers
Published on 2nd July 2026
Draft regulations introduce a 'reputable scheme' pathway, revise transfer flags and ease consolidation for members
At a glance
Draft regulations would allow UK trustees to approve straightforward transfers without a full flag check.
The overseas investment amber flag is to be removed, while the missing employment link is upgraded to a red flag.
Members who have recently taken pensions guidance would be exempt from taking it again when consolidating multiple pension pots.
The UK government is consulting on draft regulations that would reform the conditions governing pension transfers, introducing a new "reputable scheme" route for low-risk cases and revising the scam-protection flags that trustees are required to assess.
The draft changes to The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 apply to transfers to schemes other than public service pension schemes, Pensions Regulator-authorised defined contribution (DC) master trusts and Pensions Regulator-authorised collective defined contribution (CDC) schemes. The consultation closes on 21 July.
Transfer conditions
Under current legislation, a statutory transfer value, also known as a cash equivalent transfer value or CETV, can only be paid if certain requirements are met. These include the first or second condition in the transfer regulations.
The first condition is met if the trustees of the scheme making the transfer are satisfied beyond reasonable doubt that the receiving scheme is a public service pension scheme, a Pensions Regulator-authorised DC master trust or a Pensions Regulator-authorised CDC scheme.
In any other case, trustees must check if the second condition is met, which requires a check whether the transfer raises any of the red or amber flags listed in the regulations. The trustees must not pay the transfer value if there are one or more red flags. The trustees can only pay the transfer value after the member has taken Money and Pension Service (MaPS) guidance if there are one or more amber flags.
Reputable scheme route
The principal change the draft regulations will make is to add a reputable scheme option to the first condition. Trustees would be able to determine that the first condition is met where they are satisfied on the balance of probabilities that the receiving scheme is reputable.
That would remove the need to assess red and amber flags in cases where trustees have no concerns about the receiving scheme. The consultation invites views on a proposed non-exhaustive list of factors that trustees and scheme managers may consider when assessing reputability.
Overseas investments
Where the second condition still applies, the overseas investment amber flag is to be removed. The Department for Work and Pensions (DWP) takes the view that this "reflects the reality that many legitimate schemes include overseas investments". A check on whether the receiving scheme includes high‑risk or unregulated investments or unclear, complex or unorthodox investment structures should, it adds, protect against the types of scam risk that the overseas investments amber flag was intended to address.
Incentives flag
The incentives flag will remain, though the DWP notes that broadening the first condition should give trustees greater discretion to proceed where they are satisfied that the receiving scheme is safe.
MaPS guidance
The draft regulations also propose to exempt members who have taken MaPS guidance within the last 12 months from the requirement to take it again. This is intended to help members consolidating multiple pots and to reduce the wait time for MaPS appointments.
Employment link
The absence of an employment link between the member and an employer in an occupational pension scheme will be upgraded from an amber flag to a red flag to help address the misuse of small, self-administered schemes (SSASs).
The DWP says a "missing employment link is a strong indicator that the receiving SSAS may be operating outside its legitimate purpose", adding that giving scheme providers the power to refuse the transfer would help to ensure that SSASs are used only for their intended, lawful functions and deny fraudsters opportunities to exploit the system.
Osborne Clarke comment
These proposals represent a welcome and pragmatic evolution of the transfer conditions regime. The introduction of the reputable scheme route addresses a practical frustration: the need to conduct a full flag assessment in cases where there are no scam concerns.
The removal of the overseas investment flag and the upgrade of the missing employment link to a red flag are also both sensible steps.
The proposed reputability factors are worth trustees and scheme administrators reviewing, and there is a real opportunity to influence the final framework through the consultation, drawing on practical experience of managing transfers.
The draft regulations are only the first stage of a broader programme of work on pension scams and transfer, the DWP has indicated. Schemes should expect more on pension transfer issues later this year.
The DWP says workstreams will include "how processes can be modernised and how savers who choose to transfer their pensions are enabled to make well informed decisions, while maintaining the robust protections needed to defend against evolving scams risks." It also aims to "restore SSASs to their intended purpose as flexible retirement vehicles for legitimate users, closing down avenues for abuse." It will be worth trustees and scheme administrators watching developments closely.
