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44% of pension transfer amber flags raised for ‘unknown’ reasons

Money and Pensions Service does ‘not appear to be proactively improving the data they are collecting’


A large number of Money and Pensions Service (MaPS) amber flags scam guidance sessions are being conducted without knowledge of the reason for the flag being raised, according to a Freedom of Information (FOI) by Quilter.

The MaPS data shows that in nearly half the cases, the service does not know the specific reason for the member attending the session. ‘Unknown’ was given as the reason in 44% of recorded cases over the past three months (April-June 2022).

Additionally, overseas investments remains a common cause of an amber flag being raised, resulting in many potentially low risk pension transfers being put on hold for this reason to the end of June 2022.

Due to the very broad way in which the rules are worded, some pension schemes are raising amber flags on overseas investments covering mainstream investments, such as funds from major asset managers that are investing globally. MaPS warned that the high proportion of ‘unknowns’ is likely to create a significant skew in relation to the numbers, so the real figure could be higher still.

Quilter added that MaPS does “not appear to be proactively improving the data they are collecting” as in the same FOI response the service confirmed they “do not enter into correspondence with members, schemes or providers about the reason for the amber flag”.

Table 1: MaPS data on reasons for reported amber flags

April 22 May 22 June 22
Complex investment structure 21 29 18
Evidence provided not genuine 12 5 8
High risk/unregulated investments 60 55 69
High volume of same scheme 7 3 1
High volume with same financial adviser 4 6 2
Overseas investments 211 412 409
Unclear/high fees 73 105 99
Unknown 327 478 461
Total 715 1,093 1,067

Source: Quilter

Guidance sessions

The pension transfer rules introduced in November 2021 require the trustees of a transferring pension to raise an amber flag, which pauses a pension transfer, if they find that there are overseas investments included in the receiving scheme or other relevant issues. Before the transfer can be authorised, the member involved must prove they have received scam guidance from the MaPS following the transfer being flagged.

Since the introduction of the new transfer rules, a total of 3,731 members have received scam guidance from the MaPS as a result of an amber flag being raised by a trustee (to June 2022).

Month on month, the number of amber flags raised have increased significantly, leaping from just 20 guidance sessions in December 2021 to 1,067 in June 2022. However, the rate of month-on-month growth appears to be slowing and was nearly level between May and June 2022.

Table 2: MaPS data on number of scam guidance sessions

Month Scam guidance sessions % change from previous month
December 20 N/A
January 109 +445.00%
February 222 +103.67%
March 505 +125.48%
April 715 +41.58%
May 1,093 +52.87%
June 1,067 -2.38%

Source: Quilter


Jon Greer, head of retirement policy at Quilter said: “In the 12 months to 31 November 2021, the Money and Pensions Service took just 482 calls and webchats in relation to pensions scams. Comparatively, in the seven months that followed the introduction of the new pension rules, this number soared to 3,731.

“This highlights the real disconnect between the number of people whose pension transfers were potentially being targeted by a scam, versus the number of people who were able to identify this and reach out for help prior to the rule change.

“However, while it is positive to see such a noted increase in the number of people receiving scam guidance when it comes to their pension transfers – particularly where there is a genuine cause for concern – there remains a clear issue with transfers being halted where the trustees are finding an amber flag, but MaPS is not being made aware of the reason.

“The lack of information provided to MaPS in terms of the reason for the amber flag being raised is concerning. If the information is not logged, and particularly whether there was an actual risk of a scam, it will be difficult to assess where scams are focusing and may provide an inaccurate picture of the effectiveness of the regulation.

“What’s clear is that we need an improvement on the data collected to see the reasons for the member attending the scam session – no doubt this will help the session with the member, and secondly, we need to resolve the impasse that Trustees face in applying the letter of the law which is out of step with the policy intention.”

Regulatory action

This FOI comes several months aftert the Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) stepped in to provide clarity around the pension transfer rules.

It followed accusations by platform PensionBee which named and shamed a number of “rogue” providers it claimed were using loopholes in the regulation to “block and delay consumers from moving their pensions”.

PensionBee chief executive Romi Savova explained that the providers were using a very broad interpretation of ‘incentives’ provided by the receiving scheme as a reason to halt a transfer. This included the firm’s £50 ($62, €58) refer-a-friend programme.

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