DWP consults on amendments to Conditions for Transfers Regulations

The Department for Work and Pensions (DWP) is consulting on proposals to amend the Conditions for Transfers Regulations 2021 as the first stage in a broader programme relating to pension scams and pension transfers. The consultation runs until 21 July 2026.

The immediate focus is addressing scam risks. However, later this year, the programme will explore wider pension transfer issues, including how processes can be modernised and how savers can be better supported to make well-informed transfer decisions, while still guarding against evolving scam risks.

Protecting savers in occupational pension schemes

The DWP aims to ensure that the regime balances strong protections with the need to avoid unnecessary barriers to transfers. Its review of the Conditions for Transfers regime concluded that it remained fit for purpose but identified issues that needed amendments. These included:

• A narrow interpretation of the First Condition (that is, where trustees are satisfied the transfer is to a legitimate scheme without further analysis) meant that trustees sometimes carried out additional due diligence even though they had no scam concerns
• The overseas investments amber flag can trigger where there are no indicators of scam activity – over a third of safeguarding appointments were solely because of this flag
• Savers were required to attend multiple guidance appointments when consolidating several pots, which may have added burden without improving protection

Accordingly, the following amendments are being consulted on:

• The First Condition would be modified so that trustees can treat it as met where they are satisfied, on a balance of probabilities, that the transfer is to a ‘reputable’ pension scheme
• The Regulations would include a non-exhaustive list of factors that trustees may have regard to when assessing whether a receiving scheme is reputable. These could include cases where there is an existing relationship, the nature and risk profile of that scheme’s investments, any prior warning flags or regulatory concerns, and its overall level of transparency. The DWP invites suggestions on what these factors should be
• Overseas investments would be removed from the list of circumstances that trigger an amber flag (and so require the member to obtain guidance from Money and Pensions Service (MaPS))
• Members who have taken MaPS guidance within the last 12 months would be exempt from repeating it when consolidating multiple pots

The removal of the overseas investments flag will be helpful, but it remains to be seen how confident trustees will be in deciding that the First Condition is met on the basis that the receiving scheme is a ‘reputable’ scheme.

Actions in relation to Small Self-Administered Schemes (SSAS)

The DWP believes that risks identified in the SSAS landscape require action. It proposes to introduce a red flag (instead of amber) where a transfer is proposed and the evidence provided does not demonstrate an employment link with the receiving occupational pension scheme.