Rules introduced in November 2021 require trustees of a transferring pension to raise an amber flag — which pauses a transfer — where certain conditions are met, such as when there are overseas investments included in the receiving scheme. The member involved must then prove they have taken scams guidance from MaPS before the transfer can proceed.
The rules have been criticised for their broad wording, leading to arguments within the industry, such as when PensionBee reported a number of providers to the Department for Work and Pensions for allegedly exploiting the rules to unnecessarily delay transfers.
Some 3,731 members have received guidance from MaPS as a result of amber flags since the introduction of the rules in 2021, and Quilter noted that the number is increasing “significantly” month on month, jumping to 1,067 guidance sessions in June 2022 from just 20 in December 2021; though it noted that the rate of growth would appear to be slowing.
The 44 per cent of cases between April and June 2022 where “unknown” was listed as the cause amounted to 1,266 out of a total of 2,875 amber flags, while overseas investments likewise prompted a disproportionate number — 1,032 — leading to fears that many low-risk pension transfers are nevertheless being put on hold.
Quilter warned that the “broad” way the rules around amber flags are worded is leading to schemes flagging overseas investments that are in fact safe and mainstream, such as funds…
