Quilter has called for the Department of Work and Pensions to take ‘urgent action’ to resolve pension transfer issues after it found problems were persisting for pension savers.
A Freedom of Information request from the Money and Pensions Service, submitted by Quilter, found more than 23,000 of the 28,118 amber flags raised over the past two and a half years were raised due to either an unknown reason or for a potentially low risk transfer relating to overseas investments.
Quilter pointed out, while it is positive thousands of people have potentially been saved from fraudsters since pension transfer regulations were first implemented, it believes this has been overshadowed by the large number of pension transfers that have been halted unnecessarily.
Since the introduction of the regulations there have been 28,118 MoneyHelper pension safeguarding sessions, according to Quilter.
Out of the total sessions, 46 per cent were conducted with an attendee who did not know the reason why an amber flag had been raised on their pension transfer.
While 36 per cent were conducted after a flag was raised on potentially low-risk transfers relating to overseas investments.
Jon Greer, head of retirement policy at Quilter, said: “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.”
Greer explained that despite the DWP confirming that work would be done to consider whether the rules could be improved, no indication of a timeline was given.
“Though it is good to hear that the DWP is making efforts to adjust its rules to eliminate the current issues, this arguably should have been done a year ago when it first published its review and could have made changes to prevent further disruption to pension savers,” he added.
Quilter said the DWP “must act” to ensure “divergence between policy intention and the practical application of the law when it comes to the overseas investments wording is ironed out”.
This is because at the moment there is no distinction between overseas investments that present a scam risk as opposed to those that don’t.
Greer added: “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.”
alina.khan@ft.com
