The Department for Work and Pensions has launched a consultation to tackle fraud in Small Self Administered Schemes (SSASs), amid growing concern around fraudulent misuse.
There are currently around 60,000 SSAS savers across 21,000 schemes and while this is a small part of the overall pensions market, the DWP said evidence suggests that SSASs may be more vulnerable to fraud.
Data from Report Fraud found the average financial loss of pension fraud in 2024 to 2025 was £18,500, rising drastically to £38,400 for SSASs.
The consultation on proposed amendments to the Occupational and Personal Pension Schemes Regulations 2021 is asking for feedback on a proposal to introduce a new red flag where a transfer is proposed but the evidence provided does not demonstrate an employment link with the receiving occupational pension scheme.
A missing employment link is a strong indicator that the receiving SSAS may be operating outside its legitimate purpose, it said.
This represents a change from the current position, where such cases may only give rise to an amber flag, and will operate alongside the existing red flag provision.
The DWP said the proposals mark the first step in a wider, ongoing government programme to tackle pension fraud, warning that as defined contribution savings grow and the pensions landscape continues to evolve, increasing pot sizes make pension savings a more attractive target for scammers.
Maurice Titley, commercial director for data and dashboards at Lumera, said: “The proposed introduction of a new red flag on transfers where there is no clear employment link with the receiving SSAS is a sensible enhancement. It addresses a known vulnerability and gives trustees and providers a clearer basis on which to challenge or stop potentially suspicious transfers before harm is done.
“However, this is not just an issue confined to SSASs. The wider DC pensions market also has a clear role to play in strengthening defences against fraud, particularly through better use of technology, data sharing and more robust transfer due diligence processes. As scams become more sophisticated, the industry’s ability to detect and disrupt suspicious activity needs to evolve in step.”
David Brooks, head of policy at Broadstone, echoed the sentiment: “The proposal to move from an amber to a red flag where an employment link cannot be demonstrated is a targeted intervention that should help prevent transfers into arrangements that may not be operating for legitimate pension purposes.
“Importantly, these measures represent only the first stage of what appears to be a much broader government focus on tackling pension scams and fraud. It is encouraging to see the Government signalling further work on scam prevention, transfer processes and member protections.
“The industry will need to remain vigilant and continue working closely with regulators, government and law enforcement to ensure safeguards evolve as quickly as the threats they are designed to combat. Protecting savers’ confidence in the pensions system will be critical as more individuals take greater responsibility for their retirement decisions.”
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