The Pensions Regulator (TPR) has published a new Guidance for trustees, pension managers and administrators on checking, proceeding with and refusing transfer requests from scheme members.
From 30 November 2021, as part of the due diligence process for transfer requests, both trustees and scheme managers have the duty to make specific checks before dealing with transfers. The checks to be carried out will determine which conditions apply to the transfer and whether a statutory transfer can proceed.
First condition: The receiving scheme is listed in the transfer regulations
Is the receiving scheme one of the following?:
a public service pension scheme (schemes established by a public authority for civil servants, armed forces, health service workers, teachers, judiciary, police, firefighters and local government workers)
a collective defined contribution (CDC) scheme that has obtained authorisation and is included on the list which TPR will publish
If, beyond reasonable doubt, the receiving scheme is one of those listed above, the transfer can proceed without any further checks.
The member must receive confirmation that the receiving scheme is one of the types described above no later than the date at which it is confirmed to the member that the transfer has been made.
Second condition: Check for an employment link, overseas residency and red and amber flags
Where the receiving scheme is not one of those described in the first condition, it must be considered whether the second condition is met. This may require further checks to assess the level of risk to the member. It may be the case that, from previous checks on the receiving scheme, it is concluded that the transfer is low risk and therefore the second condition is met.
The table below lists the red and amber flags mentioned in the Guidance:
The Guidance contains useful paragraphs on:
1- how to collect relevant information;
2- how to carry out due diligence;
3- how to direct members to mandatory guidance from MoneyHelper; and
4- when to refuse a transfer.
The Guidance also includes this helpful "Transfer process decision" tree to aid decision-making on the various checks.
Source: The Pensions Regulator – Guidance on Dealing with transfer requests (Appendix 1)