Speaking to exclusively to International Adviser, Stewart Davies, group chief executive of specialist pension provider Momentum Pensions, said although the industry welcomes the ban on cold calling and the wider crackdown on pensions scams, he believes putting limits on UK pension transfers may be a step too far.
Limiting pension transfers
Earlier this month, the government said it is looking at giving greater powers to existing pension providers to block suspicious transfers to a personal pension scheme, including a recognised overseas pension schemes (Rops) as well as self-invested personal pensions (Sipp).
“The limitation on the statutory right of transfer is anti-consumer when there are so many safe guards already in place in relation to the need to obtain advice for defined benefit transfers and the regulation of schemes generally,” said Davies.
“Whilst the banning of cold calling and reducing the ability to open fraudulent schemes is welcomed, we wish to ensure that these measures do not allow ceding schemes to restrict or delay transfers to overseas schemes, and that any such restriction should be prescribed.”
“The limitation on the statutory right of transfer is anti-consumer when there are so many safe guards already in place."
Under the proposal laid out in a consultation paper on 5 December, the government said a statutory right to transfer would only exist where:
- the receiving scheme is a personal pension scheme operated by an FCA authorised firm or entity,
- a genuine employment link to the receiving occupational pension scheme can be demonstrated,
- there is evidence of regular earnings from that employment and confirmation that the employer has agreed to participate in the receiving scheme;
- or the receiving occupational pension scheme is an authorised master trust.
Against ‘arbitrary discretion’
Instead, Davies is calling on the UK to set out clear criteria to make it easier for overseas pension transfers to take place, rather than relying on a provider’s “arbitrary discretion”.
This would involve giving the go head to overseas transfers to schemes that meet the UK’s proposed new changes, requiring all Rops to be regulated in their country of origin as well as the use of “properly regulated advisers” either in the UK and abroad.
“What we are seeking and the industry should seek to avoid is arbitrary discretion by the transferring scheme to make the transfer or not. We believe that this would detrimental to consumer rights in the UK, or for any British expatriates seeking to transfer their pension benefit,” he adds.
Davies reveals that Momentum Pensions is currently working with UK law firm Weightmans and has already drawn up a “detailed due dilligence pack” on its overseas pension transfers. He added that the firm is planning to responded to the government’s consultation.
Rops reforms
John Batty of Isle of Man-based Boal & Co, an actuarial consultancy firm specialising in international pension schemes, said there is clearly a link between UK’s proposed reforms to Rops, announced in the Autumn Statement last month, and the government’s crackdown on pension scams.
“The new Rops regulations, and in particular the requirement for pension providers to be properly regulated, as they are in the Isle of Man and Malta, clearly fits in with the governments desire to clamp down on pension scams, and I would suggest that this is not a coincidence,” he told IA.
