The Government yesterday published its Pension Schemes Bill.
Part of the Bill looks to tackle pension transfer fraud with new rules to ensure that pension scheme providers, employers and other related people e.g. financial advisers to take necessary measures to check that pension schemes that are having pension funds transferred to them have been checked that they are valid schemes.
The proposed validation rules will require trustees to ensure the receiving scheme for a transfer is regulated by the Financial Conduct Authority, or has an active employment link with the individual, or is an HMRC authorised master trust.
It has been estimated that more over 160,000 pension transfers impacted by new rules including apply to 60,000 master trust defined contribution transfers and 100,000 defined benefit pension schemes transfers at a costs to pension schemes and employers of £1m in year 1 and £540,000 + pa thereafter.
This is brilliant news. It should always have been a requirement of the original pension scheme to check that it is allowing a transfer out of member’s pension rights to a valid scheme.