UK proposes automatic block on flagged pension transfers

The UK government has proposed new rules to automatically block pension transfers that show clear signs of being scams, aiming to protect savers from fraudsters who have been exploiting a specific type of pension arrangement. The Department for Work and Pensions launched a public consultation on the measures, which target transfers into Small Self-Administered Schemes (SSAS) where there is no discernible link between the saver and the receiving scheme.

Under the proposed safeguard, such a scenario would trigger an immediate red flag, enabling pension trustees to halt the transfer before funds leave a saver's legitimate pension pot. The move follows government figures showing that average losses linked to suspected SSAS pension scams have risen to 38,400 pounds per victim. Pensions Minister Torsten Bell stated that pension scams can destroy not only people's savings but the retirement they anticipate, and that the government is determined to stay ahead of criminals exploiting savers.

Simultaneously, the consultation seeks views on cutting red tape that has slowed legitimate pension transfers, following industry concerns that existing anti-scam regulations can delay genuine...