20 July 2026
Ahead of the Department for Work and Pensions’ consultation on the pension transfer regulations closing tomorrow, please see the following comment from Jon Greer, head of retirement policy at Quilter:
“The Department for Work and Pensions’ consultation on the pension transfer regulations is a welcome, if long overdue, opportunity to address the unintended consequences of the rules introduced in 2021. Protecting consumers from scams is vitally important, but in the almost five years since implementation, the current framework has too often created significant delays and obstacles for people making entirely legitimate pension transfers.
“Having long since lobbied for its removal, we are particularly pleased to see that the overseas investments amber flag has finally been served its eviction notice. This has been one of the most common causes of transfer delays since the regulations were introduced, despite overseas investments being a legitimate and commonplace feature of many pension arrangements. Freedom of information data we obtained from the Money and Pensions Service shows that more than 18,000 amber flags have been raised for this reason alone since December 2021. Removing this flag would go a long way towards ensuring savers are not drawn into unnecessary processes where there is no genuine indication of scam activity. The regulations must be sufficiently targeted to identify real risks without making it harder for people to move their pension savings when it is in their best interests to do so.
“However, there is still more work to be done. While we support efforts to strengthen protections around higher risk transfers, particularly in areas such as small self-administered scheme (SSAS) arrangements, any new requirements must be carefully designed to avoid creating fresh barriers. For example, amending the existing amber flag in the case of no demonstrable employment link to a red flag is understandable, but without reform of the employment link test which does not always work effectively for directors and business owners, legitimate SSAS transfers could be blocked unintentionally. What’s more, the proposed employment link would be a useful indicator, but it may not address all risks that can arise within SSAS arrangements, leaving the potential for consumer detriment after a transfer has completed.
“We would also welcome further clarity around what constitutes a reputable receiving scheme. A more consistent, risk-based approach that takes account of facts such as regulator authorisation, governance standards and transfer history could help providers distinguish more effectively between genuine scam risks and routine transfers, while still preserving discretion. In turn, this would improve outcomes for consumers and allow providers to focus their time and resources on cases where there are genuine concerns.
“There also remains an issue around transparency. Our understanding of the effectiveness of the current regime has been hampered by the lack of clarity given to customers about why an amber flag has been raised in the first place, which in turn limits the usefulness of the data available from MaPS. The latest figures show that almost half of all guidance appointments conducted since the regulations were introduced involved individuals who were unaware of why an amber flag had been raised, therefore why they needed to attend the appointment. Pension schemes should be required to provide clear and accurate information when a flag is triggered, and the DWP should consider making this an explicit legislative requirement.
“The success of these reforms will be judged on whether they better protect consumers from scams without preventing people from transferring their pensions when it is right for them. This consultation is a positive step in that direction, but it must represent the beginning rather than the end of the process.”
