The Pensions Ombudsman (TPO) recently issued its first ruling on the "amber flag" related to overseas investments within the pension transfer value regulations.
Facts:
Mr W sought a pension transfer in February 2022, triggering an amber flag due to perceived overseas investments. The Trustee required him to consult MoneyHelper. Mr W's adviser disagreed, causing a delay. His transfer was completed in May 2022, resulting in a reduced value.
Background:
The Transfer Regulations, effective from 30 November 2021, govern transfers initiated on or after that date. These regulations restrict the statutory right to transfer, imposing conditions that must be fulfilled, including evaluating the presence of red or amber flags.
Under this framework, a red flag stops the statutory transfer, while an amber flag temporarily suspends it until the member seeks specified guidance from MoneyHelper before trustees can proceed with the transfer.
Decision:
TPO ruled in favour of the Trustee, stating they acted reasonably. The decision emphasised the Trustee's right to interpret regulations and concluded that the delay was not unreasonable, considering the perceived overseas investments.
Our comment:
This case serves as a crucial support not only for pension trustees but also for administrators and providers grappling with the growing complexity of pension transfers. The intricacies involved, especially the need for additional scrutiny and consultations with MoneyHelper, have become more challenging since the Transfer Regulations came into force. TPO’s ruling provides valuable guidance, shedding light on the proper application of the "amber flag" in the context of overseas investments and giving clearer insights into how to navigate the regulatory landscape surrounding transfers and the associated requirements for member safeguards.