Proposals to give trustees the power to halt pension transfers where a scam is suspected have gained support from advisers, despite some scepticism over the practicality of implementing them.
Keith Richards, chief executive officer of the Personal Finance Society, said this week’s amendment to the Pension Schemes Bill, which seeks to remove people’s statutory right to transfer where a scam is suspected, was a positive move.
But he warned it must not stop legitimate transfers from taking place.
He said: “When considering the case of defined benefit pension scams, it is important to remember that individuals are often manipulated by sophisticated scammers who take advantage of deep-seated behavioural biases.
“As a result, it is appropriate for trustees to exercise a duty of care when they can see an individual is about to become a victim of crime.
“That said, it is equally important that trustees engage with advice firms to ensure they are not standing in the way or legitimate regulated advice.”
Under current rules, trustees have a legal duty to carry out a transfer within a six-month deadline and if they refuse they could be at risk of legal action.
Mr Richards thought giving trustees the ability to intervene when they see very suspicious behaviour taking place would help to reduce the number of people being caught out by fraudsters.
But Kate Smith, head of pensions at Aegon, believed the rule change would have the biggest impact on small pots as holders of larger pots are already required to seek advice before a transfer.
Ms Smith said: “In the DB world, if the value of the transfer is above £30,000, members must seek regulated advice from an adviser authorised to advise in this market.
“Trustees already have a responsibility to check that members have taken advice from an authorised adviser, before agreeing to the transfer, so we believe the new provisions are [likely] to have little impact on defined benefit transfers.”