A cross industry code of best practice has been launched to help providers, adminstrators and pension fund trustees in the fight against pension scams.
In January, the Pension Ombudsman ruled against members requesting transfers out of schemes in three cases, but criticised providers for failing to do adequate due diligence before refusing requests.
The voluntary code is based around three principles: raising awareness of scams, ensuring “robust but proportionate” processes for assessing if a receiving scheme is a scam, and keeping up with scammers’ strategies.
It also covers areas such as the process of dealing with a transfer request, assessing the risk of a scam, refusing transfers, reporting to the regulator, dealing with complaints and designing discharge forms.
In addition, it provides model letters for communicating with members, regulators, administrators and HMRC.
Pensions Administration Standards Association chair Margaret Snowdon chaired the industry group behind the code.
She says: “As a result of the code, there’ll be more transfers but there will be fewer transfers to bad places. At the moment a lot of perfectly valid transfers have not been made because of concerns they are scams.”
But she warns the pension freedoms make it harder for the industry to stop scams if members taking their savings as cash.
She says: “The code does not cover any money that goes outside of the pensions space, where people take cash from the DC fund, there isn’t a lot we can do about that other than turning trustees into investment advisers, which we’re not going to do.”
DLA Piper pensions partner Matthew Swynnerton says: “Scam activity may increase with the introduction of the new pensions flexibilities next month. Scams present a genuine dilemma for trustees and their advisers and there is a divergence of views across the industry in relation to how trustees should behave.”
“We have worked hard over several months to draft a Code of Good Practice that sets an industry standard, strikes the right balance and meets the requirements of various key regulatory bodies.”
The Association of British Insurers, Department for Work and Pensions, The Pensions Regulator, National Association of Pension Funds, HMRC and the FCA have all backed the code.