Quilter has called upon the Department for Work and Pensions to take action to resolve the delays facing pension transfers.
Two and a half years on from the introduction of the pension transfer regulations, a new freedom of information request by Quilter has revealed that more than 23,000 of the 28,118 amber flags raised during that period were raised due to either an unknown reason or for a potentially low risk transfer relating to overseas investments.
Of the 28,118 MoneyHelper Pension Safeguarding Guidance sessions conducted since the pension transfer regulations were brought in, 46% were conducted with an attendee who did not know the reason why an amber flag had been raised on their pension transfer. More than a third (36%) were conducted after a flag was raised on potentially low-risk transfers relating to overseas investments.
Despite the DWP recognising that the regulation wording in relation to overseas investments was causing delays and issues for pension savers, no action to resolve the issue has been taken. Quilter also pointed to a “persistent lack of information” provided to customers on the reason for an amber flag being raised, which it warned could negatively impact customer engagement.
Jon Greer, head of retirement policy at Quilter, said: “We are well into the third year of the pension transfer regulations, and while it is positive that many people will have been saved from fraud thanks to the protection provided, the same issues that were recognised within the first few months continue to persist even now.
“As the industry has repeatedly highlighted, there remain far too many unnecessary points of friction within the regulations which have greatly limited their effectiveness. Unfortunately, the lack of meaningful change from the DWP has resulted in a growing number of people being negatively impacted as their pension transfers have been stopped in their tracks for what is often no real reason.”
While the DWP has confirmed that work to consider whether the rules could be improved is going, it gave no indication of a timeline.
Greer continued: “As a matter of urgency, the DWP must act to ensure that the divergence between policy intention and the practical application of the law when it comes to the overseas investments wording is ironed out as at present, there is no distinction between overseas investments that present a scam risk as opposed to those that do not.
“Additionally, our understanding of the effectiveness of the rules has been marred by the lack of clarity provided to customers as to why a flag has been raised, and consequently the data that MaPS is able to capture. Pension schemes must be required to provide accurate and clear information to customers and the DWP should consider making it an explicit legislative requirement to swiftly resolve this issue. Pension savers have suffered needless delays for years now, and only the DWPs action will be able to finally put a stop to it.”
