UK. Third of high risk DB transfers would pass new scam test
One in three defined benefit transfers flagged as high risk would be allowed under new government proposals designed to reduce scams, a consultancy has warned.
XPS looked at data from its Scam Protection Service and found that of all the transfers flagged by the service since July 2018, one in three would have satisfied the ‘first condition’ of the Department for Work and Pensions’ proposed legislation.
The government is planning to give trustees the power to halt suspicious transfers and has proposed a system of red and amber flags for identifying transfers to schemes which do not fulfil certain criteria, for example an employment link between the holder and the occupational scheme they wish to transfer to.
Under the proposals the first condition requires trustees to identify if the transfer is to a certain type of scheme allowed under the new rules.
This includes personal pensions authorised by the FCA, master trusts, public service pension schemes or collective money purchase schemes.
But XPS found out of the 462 transfers its service had identified as being at high risk of a scam, 37 per cent would meet the first condition and thus would not require any further checks.
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