UK government bans pensions cold calling and tightens transfer rules

In its response to a consultation on pension scams (28 page / 450KB PDF) which opened in December, the government said it had received strong support for its proposals designed to address the issue of pension scammers.

But pensions expert Ben Fairhead of Pinsent Masons, the law firm behind Out-Law.com, said there remained considerable uncertainty over the changes, noting: “There is a lot of detail still missing and timing of any change is sketchy to say the least.”

The government confirmed it will ban all unsolicited calls, emails and text messages about pensions. There will be exclusions for legitimate businesses including in cases where an existing client relationship exists.

The ban will be enforced by the Information Commissioners' Office, although those in breach of the ban will not face criminal sanctions or custodial sentences. The government said it would bring forward legislation to implement the ban when Parliamentary time allows.

The consultation also found support for the government's proposals to limit the statutory right to transfer to certain types of pension schemes: those operated by Financial Conduct Authority (FCA) authorised companies; into authorised master trust schemes; and where a genuine employment link to a receiving occupational pension scheme can be evidenced. The government said the limitations would still allow trustees and managers to authorise the vast majority of transfers.

Some respondents to the consultation expressed concern the limitations would prevent the transfer to legitimate qualifying recognised overseas pensions schemes (QROPS), although others noted that QROPS were an area of concern for pension scams.

The government said it would implement its proposed limitations, although the process would be delayed due to the timetable for rolling out a new authorisation regime for master trusts, which will be implemented in late 2018 and will be fully rolled out in 2019. The two regimes should be aligned, according to the consultation.

Fairhead said there had also been no decision made as to what “regular earnings” might look like for the purposes of introducing an employment link for transfers to non-regulated schemes.

“We are simply told there will need to be more engagement with industry so do not seem to be much further forward,” said Fairhead.

“The most imminent change is likely to be the introduction of a requirement that a pension scheme only be registered through an active company, which will come in through the Finance Bill 2017, albeit HMRC already have strong powers to prevent the registration of suspicious schemes so it is debatable how much difference this will make,” said Fairhead.

Fairhead said the announcement was nevertheless a positive move.

“This allays concerns that this has dropped off the government’s radar completely, which was the concern after reference to pension scams was omitted from the Queen’s Speech,” Fairhead said. “It is also encouraging that the government continues to look at this as a package of changes – there is no silver bullet that will on its own solve the problem of pension scams.

“The slow pace of progress towards legislative change does underscore though the need for consumers and industry to remain vigilant about spotting pension scams until more positive action is taken to stop them,” said Fairhead.

The Department for Work and Pensions also said almost £5 million was obtained by pension scammers in the first five months of 2017. It is estimated that £43m had been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of nearly £15,000.