The Pensions Ombudsman has dismissed a complaint against a trustee who referred a transferring member to MoneyHelper for a safeguarding appointment. The referral was made for an ‘amber flag’ on overseas investment, after seeking legal advice on the case. The extra process caused a delay for the member's transfer. This is an important first decision on the 2021 Transfer Conditions Regulations, applicable to both personal and occupational pension schemes. 

The trustee's approach followed the legal requirements for a statutory transfer set out in the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, by referring the case when it was disclosed that overseas investments were involved, regardless of the risk level of those investments. These regulations are acknowledged not to align well with the legislative intention behind the regulations, due to their breadth of application. The Pensions Ombudsman helpfully referred to these known issues and commentary around them, including:

  • the Joint Committee on Statutory Instruments in its Twenty Second Report of 2021-22
  • the Practitioner Guide (Interim) Version 3.0 from the Pension Scams Industry Group
  • updated guidance from the Pensions Regulator
  • a joint statement from DWP and the Pensions Regulator
  • legal commentary on the regulations.

Notably, the Pensions Ombudsman did not make a definitive ruling on the interpretation of the law. This leaves it open for other trustees to argue in a similar case that it would not be unreasonable to proceed with the transfer.

Key points in the Ombudsman's decision were the acknowledged differences between the regulations and their "intended practical application", the information actually provided to the trustee, and that legal advice was sought. 

Whilst trustees can take a risk-based approach by authorising a discretionary non-statutory transfer without making a referral for an ‘amber flag’, this decision is helpful in supporting trustees who decide to follow the statutory process laid down.

The DWP are reviewing the regulations involved, so in time we may see changes made to clarify the position.