DWP accused of inaction over pension transfers

Major issues continue to plague the DWP’s pension transfer regulations three years after they were implemented, new FOI data has revealed. The data shows that four out of five pension transfers have been halted by an amber flag for an unknown or potentially low-risk reason. Some 27,900 out of a total 33,917 amber flags over pension transfers have been raised for either an unknown reason or for a potentially low-risk transfer relating to overseas investments. The data is based on the latest figures from the Money and Pensions Service gathered by pension provider Quilter. The regulations introduced in November 2021 have meant that thousands of people have been saved from fraudsters. Quilter said the huge number of pension transfers that have been needlessly interrupted, and the knock-on impact this has had on pension savers, greatly clouds the success of the regulations. The firm said the industry has repeatedly called for legislative change to prevent unnecessary delays in pension transfers, yet the DWP has taken little visible action. Of the 33,917 MoneyHelper pension safeguarding guidance sessions conducted since the pension transfer regulations were introduced, almost half (15,677) were conducted with an attendee who was unaware as to why an amber flag had been raised on their pension transfer. Quilter said that suggests they may not understand why they needed to attend the appointment, and therefore could have a significant impact on customer engagement and the effectiveness of the sessions. A further 12,223, or more than a third, were due to a flag being raised on potentially low-risk transfers relating to overseas investments. In its review of the regulations, published more than a year ago, the DWP acknowledged that the regulation wording in relation to overseas investments was causing delays and issues for many pension savers. However, since then Quilter said there appears to have been little effort to resolve the issue. Jon Greer, head of retirement policy at Quilter, said: “Change is well overdue. For three years, industry has been repeatedly highlighting the issues that pension savers are coming up against as a result of the unnecessary points of friction within the DWP’s regulations. A growing number of people have been negatively impacted as their pension transfers have been needlessly halted for what is often no real reason, yet nothing has been done to help them. “The DWP has claimed it is working to consider whether the rules could be improved, but with no indication of a timeline, it seems more and more people will face undue disruption.” He called on the DWP to resolve the current divergence between policy intention and the practical application of the law when it comes to the overseas investments wording to provide clarity on the distinction between those investments that present a scam risk versus those that do not. He also called on pension schemes to be required to give accurate and clear information to customers prior to MoneyHelper pension safeguarding guidance sessions as to why an amber flag was raised on their pension transfer. Mr Greer said: “Ultimately, pension savers have suffered needless delays for three years, and it is time the DWP put a stop to it.”

DWP accused of inaction over pension transfers

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