Flexibility is a good thing – especially for sports professionals, gymnasts, and those of us balancing work and domestic commitments. In a pension context, the increased flexibility introduced by the 2015 freedom and choice reforms has generally been seen as a welcome response to the evolving nature and shape of retirement. The flexibilities have proved popular, with over 3.7 million transactions in the first three years of the policy.

However, as anyone suffering from hypermobility knows, the premium of flexibility carries the downside risk of serious injury due to stretching beyond what was ever intended. There comes a point where the elastic band snaps. Greater freedom and choice for retirees is inevitably accompanied by the risk of poor choices which may jeopardise an individual’s retirement savings. Pension flexibilities can be a particularly fertile ground for pension scammers.

This, of course, leaves trustees between a rock and a hard place in managing member transfer requests. The tide has been turning in favour of significant due diligence in protecting against pension scams, particularly with the helpful matrices set out in the Pension Scams Industry Group’s updated voluntary code of practice. That said, trustees should also be aware of a recent decision by the Ombudsman indicating that excessive due diligence is not a good thing, and could result in provider liability for any delay causing investment loss to the transferring member.

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