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Carry out checks on pension transfers

Important

Still in draft

The information on this page is still draft. It will be finalised during the next few weeks.

You should document your pension transfer procedures and take appropriate due diligence measures when a scheme member asks to transfer their pension.

We expect most transfer requests to be completed before the statutory six-month deadline.

Collect information

During normal transfer processes you should collect the following information as a minimum:

  • name and address of the member requesting a transfer
  • information about the receiving scheme including name, address, HM Revenue and Customs (HMRC) registration number, payment details, type of scheme and identity of the scheme administrator
  • information about the financial adviser including the firm’s name, address and Financial Conduct Authority (FCA) registration number

Make sure that any member requesting a transfer of more than £30,000 from a defined benefit scheme has had advice from an adviser regulated by the FCA.

Initial risk analysis

Once you have gathered the information you should identify the level of risk to the member. This analysis will tell you if you need to carry out further checks.

Use the scheme transfer checklist (PDF, 199kb, 3 pages) to find out more about the receiving scheme and how the member came to make the request.

You can also find examples of the initial analysis process in the Pension Scams Industry Group (PSIG) Code of Good Practice.

You should be aware that no single piece of basic due diligence can definitively rule out the risk of a pension scam. Make your decision using the evidence from all the checks you carry out.

Due diligence measures to help you check a pension transfer include the following:

  • Identify if the member is vulnerable. Some members may need more support from you to avoid pension scams. You can find examples of questions used to identify vulnerable customers in the PSIG code. Keeping track of vulnerable customers allows you to easily identify who may be at greater risk.
  • Keep a record of schemes showing no risk, referred to as a ‘white list’. This allows you to maintain a smooth transfer process where due diligence analysis shows no risk. You should review this list often to make sure that schemes continue to present low risk.
  • Check that the adviser is authorised. Make sure the details provided match those on the FCA register and that the firm is not a clone firm. You should also use the FCA warning list to check for firms running scams or operating without authorisation.
  • Check for high volumes of transfers to or from the same scheme over a short period of time. This could indicate a scam and you may need to take further steps to ensure the safety of members. Actively monitor the number of requests for cash equivalent transfer value quotes and which advisers are supporting these requests. You should report any intelligence on this to the FCA on DBTransferSchemeInformation@fca.org.uk.

Further due diligence

If you are still concerned after your initial analysis, you should contact the member for further information:

  • Look for other warning signs of scams. Use the pension scam decision guide in the appendices of the PSIG code to determine the level of risk.
  • Establish if unregulated introducers are involved. Examine the nature of the contact, who made first contact and where their sources come from. This can include social media, recommendations made to the member, cold calling or even warm calling, where the member has filled in an online form after conducting their own searches for pension reviews.
  • Find out if the transfer involves unusual, high risk or unregulated investments and what the fees are. Ensure the member understands how their funds will be invested on their behalf. Investigate the level of fees being charged and check that the member understands the charges. Check if any valuable guarantees will be lost on transfer.

You may also need to contact HMRC to confirm the status of the receiving scheme. You can email them at pensionschemes@hmrc.gov.uk or write to them at Pension Schemes Services, HM Revenue & Customs, BX9 1GH. It may be several months after your initial request before you receive any response from HMRC. You should bear this in mind when considering the timing of your request to HMRC.

HMRC may confirm the status of the receiving scheme but this does not rule out the possibility that the scheme is a scam. It may simply mean that they don’t currently hold any information that indicates significant risk of a pension scam. You will have to consider HMRC’s response in addition to other warning signs and use your judgement to decide the likelihood that there is a significant risk of a scam.

Where you are still concerned you should continue with your due diligence and, where necessary, get independent legal advice. Refer to the PSIG code, as your next steps will depend on the type of receiving scheme.

Act on your concerns

If you’ve carried out due diligence and suspect a receiving scheme may be involved in a scam:

We cannot prevent a member pursuing their statutory right to transfer, nor can we permit trustees to prevent a transfer to which a statutory right applies. However, where transferring trustees or administrators show evidence that the transfer doesn’t meet the legal requirements, we would consider this when deciding whether to take action due to a transfer not being paid.

Timing of transfers

If the legal requirements are met, trustees have a legal duty to carry out a transfer of members’ cash equivalent transfer value before the statutory six-month deadline. We expect most transfer requests to be completed in this time.

In exceptional circumstances, we may grant a time extension. This includes when:

  • the member hasn’t taken all steps they need to take for you to carry out the transfer
  • you haven’t been provided with information you reasonably require to properly carry out the member’s request

The application for a time extension must be made before the end of the six-month statutory deadline given to the trustees to complete the transfer. However, in order to provide us with sufficient time to consider it, you should submit an application well ahead of this deadline, preferably at least six weeks before it. Make sure it contains all the information we require. It should:

  • explain why the transfer can’t be completed on time
  • clearly identify the basis for the extension request by referring to one of the particular circumstances under which we may grant an extension
  • state the extra time needed to make the transfer

Where you suspect a pension scam, this is not necessarily enough for us to grant a time extension.

Download the cash equivalent transfer value (CETV) extension application form (PDF, 69kb, 5 pages).

For further information, read the transfers guidance.