Pension scams—limits on the statutory right to transfer

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Pension scams—limits on the statutory right to transfer
  • Statutory framework
  • Scope of the limits
  • Minimal checks required
  • First Condition
  • Second Condition
  • Red flags
  • Amber flags
  • Standard of proof
  • Establishing the employment link and residency link
  • More...

Pension scams—limits on the statutory right to transfer

Statutory framework

Pensions liberation (and in particular the case Hughes v Royal London) has highlighted the trustees’ inability to stop a member exercising their statutory right to transfer, even if they have a strong suspicion that the receiving scheme is a fraudulent one. In 2016, the government first announced plans to limit the statutory right to transfer to certain types of schemes so as to help protect members from transferring to fraudulent schemes.

Following two consultations and years of delay, the following legislation finally came into force with effect from 30 November 2021:

  1. section 125 of the Pension Schemes Act 2021 which enables regulations to be made which restrict the statutory right to transfer, including by imposing conditions based on the member’s employment or place of residence

  2. the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, SI 2021/1237 (the Conditions for Transfer Regs), which require the trustees of the transferring scheme to carry out certain checks so as to determine whether a statutory transfer can go ahead. This will be the case if the trustees decide that one of two conditions is met. These conditions are referred to in the regulations as the First Condition and the Second Condition

As trustees remain under a deadline to complete proper statutory transfer requests, trustee must ensure that they have appropriate

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