Quilter has publicly called on the Department for Work and Pensions (DWP) to up its game on the handling of the troubles many people still face with pension transfers.
It has been two-and-a-half years since the introduction of the pension transfer regulations, and almost a year since the ‘lacklustre’ review of regulations, Quilter said.
Freedom of information data from the Money and Pensions Service gathered by the wealth manager has revealed that ‘major issues’ persist for pension savers.
Quilter acknowledged it is positive that thousands of people have potentially been saved from fraudsters since the regulations were first implemented, but claimed this has been overshadowed by the large number of pension transfers that have been halted unnecessarily.
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Despite repeated calls for legislative change to prevent unnecessary delays in pension transfers, the latest figures show more than 23,000 of the 28,118 amber flags raised over the past two-and-a-half years were raised owing to either an unknown reason, or for a potentially low risk transfer relating to overseas investments.
Of the 28,118 MoneyHelper pension safeguarding guidance sessions conducted since the introduction of the pension transfer regulations, just under half (46% or 12,888) were conducted with an attendee who did not know the reason why an amber flag had been raised on their pension transfer.
Meanwhile, more than a third (36% or 10,153) were conducted after a flag was raised on potentially low-risk transfers relating to overseas investments, Quilter found.
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Jon Greer, head of retirement policy at Quilter, said: “We are well into the third year of the pension transfer regulations, and while it is positive that many people will have been saved from fraud thanks to the protection provided, the same issues that were recognised within the first few months continue to persist even now.
“As the industry has repeatedly highlighted, there remain far too many unnecessary points of friction within the regulations which have greatly limited their effectiveness. Unfortunately, the lack of meaningful change from the DWP has resulted in a growing number of people being negatively impacted as their pension transfers have been stopped in their tracks for what is often no real reason.
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“Earlier this year the DWP confirmed that work to consider whether the rules could be improved is ongoing, but it gave no indication of a timeline,” Greer continued. “Though it is good to hear that the DWP is making efforts to adjust its rules to eliminate the current issues, this arguably should have been done a year ago when it first published its review and could have made changes to prevent further disruption to pension savers.
“As a matter of urgency, the DWP must act to ensure that the divergence between policy intention and the practical application of the law when it comes to the overseas investments wording is ironed out as at present, there is no distinction between overseas investments that present a scam risk as opposed to those that do not.”
