The Government has confirmed plans to allow pension transfers to “reputable” schemes without mandatory checks for scam red flags, a change set to take effect in April. The move is designed to simplify the system while maintaining safety.
Under the amended regulations, the First Condition will be broadened so that transfers can proceed where trustees are satisfied the receiving scheme is reputable, without the need to assess red and amber signs under the Second Condition. This is expected to reduce unnecessary checks for low-risk transfers.
Government stance on fraud
The Government is “unequivocal” in its view that “there is no place for fraud or exploitation within the pension system”, a consultation outcome updated on November 3 stated. Data showed that the average financial loss from fraud in 2024 to 2025 was £18,400, and that where an investment was identified as the primary vehicle for pension fraud, the average loss per victim increased drastically to £38,400, the Government said.
The risks identified in the Small Self-Administered Scheme (SSAS) landscape mean there is “a need for decisive action”, officials added. “This work represents the first stage of a planned programme of work that reflects our determination to tackle pension scams, tighten controls, and restore SSASs to their intended purpose as flexible retirement vehicles for legitimate users, closing down avenues for abuse,” the consultation page added.
Industry reaction
The Arc Pensions Law partner, Ben Fairhead, told Pensions Age that the policy is the most significant change for the industry, but more details are needed before it can be rolled out. “We await sight of the actual final wording to be used in the amended regulations,” he added. “However, it looks like there will be only limited changes to the wording that was put forward in June when the consultation was launched.
“In particular, the plan to allow transfers to 'reputable' schemes to go ahead without reference to the red and amber flags is set to go ahead, despite some calls from the industry to use an alternative term like 'acceptable' or 'trustworthy'.”
Proposed safeguards
The consultation added that the DWP is “committed to providing strong, zero-tolerance protections against scams while ensuring that transfer processes are efficient, proportionate, and reflective of how pension schemes operate”. “These additional proposed amendments draw on extensive evidence and stakeholder engagement and aim to target genuine risks more precisely, removing unnecessary friction without weakening safeguards,” officials added.
The Government wants to amend the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, which “already establish a safeguarding framework to protect members from pension scams through the use of red and amber flags to indicate potential risk”. The proposed amendments will introduce a new red flag where a transfer is proposed and the evidence provided does not demonstrate an employment link with the receiving occupational pension scheme, described as “a clear and robust safeguard”.
“A missing employment link is a strong indicator that the receiving SSAS may be operating outside its legitimate purpose,” the DWP wrote. “The new red flag will empower scheme providers to refuse the transfer, helping to ensure that SSASs are used only for their intended, lawful functions and denying fraudsters opportunities to exploit the system.”
Regulation 8(5) will also be tweaked to provide that a red flag will be present where the trustees or managers of the transferring scheme determine that, although the member has provided the evidence requested, that evidence does not demonstrate an employment link between the member and the receiving scheme. This represents a change from the current position, where such cases may only give rise to an amber flag, and will operate alongside the existing red flag provision in regulation 8(4)(a), which applies where the member has failed to provide a substantive response to a request for evidence or information in respect of the Second Condition.
