Most pension transfers are legitimate and can proceed with minimum intervention. However, pension scams continue to be prevalent and can lead to significant financial losses for many retirees.

The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 (the "Regulations"), arising from the Pension Schemes Act 2021, introduced a system of red and amber flags, giving trustees significantly more power to refuse statutory transfers where they consider there to be a risk a scam.

The Pensions Regulator ("TPR") has since provided guidance on the Regulations which also refers to the industry good practice set out by the Pension Scams Industry Group (PSIG).

The PSIG is a group of pension industry representatives who are committed to combatting pension scams. The body was founded in 2014. Its goal is to provide case studies and templates to assist pension industry professionals safeguard their members, support the development of best practices, and ultimately protect savers from loss due to pension scams. The PSIG first published its code of good practice in 2015. The current version (version 2.0) was issued in April 2021 (the "Code").

Concerns have been raised about applying the Regulations (in particular in respect of cases involving overseas investments or small-scale incentives) which led to TPR and the DWP issuing a joint statement in July 2022. That statement acknowledged the difficulties and confirmed that the DWP would undertake a review of the Regulations, and publish a report, within 18 months of them coming into force.

In the meantime, on 20 March 2023, the PSIG released an Interim Practitioner Guide (the "Guide") to summarise the Regulations and how to comply with them. The Guide states that it should be read on a standalone basis (pending updates to the Code itself in due course) for guidance on the steps that Trustees and administrators should undertake when assessing a pension transfer, reflecting the position under the Regulations.

The Guide also comments on the difficulties of the current regime and notes that the PSIG will amend the Code following any clarification or amendment to the Regulations resulting from the DWP review.

The PSIG's Interim Practitioner Guide

The Guide covers statutory transfers, discretionary transfers, and additional guidance.

PART A: Statutory Transfers

Part A deals with statutory transfers, as covered by the Regulations. The Guide gives detail on the process for due diligence, the conditions to be met and sets out guidance on identifying red and amber flags.

Due diligence will determine which transfer conditions (as set out in the Regulations) must be met. If a receiving scheme is a master trust, public service or collective defined contribution (CDC) scheme, the ‘first condition’ is met and a statutory transfer can go ahead. If the receiving scheme does not fall under these categories, further checks are needed to determine whether the 'second condition' is met. This requires there to be an employment link or an overseas residency link and consideration of whether there are any red or amber flags.

A red flag removes the member’s statutory right to transfer. The Guide sets out six red flags, which includes activity from cold calls to unregulated advice. A scheme offering a member an incentive to transfer is also a red flag, which would technically include legitimate schemes that have offered small rewards. The guide considers the difficulties around this.

If there is an amber flag, the member must take scams guidance from MoneyHelper before proceeding. The Guide sets out eight amber flags, which include incomplete information, risky investments, and high charges. A scheme holding overseas investments is also an amber flag and, again, the Guide considers the difficulties this can present given that many legitimate schemes will hold overseas investments.

Part A of the Guide also includes detail on the use of "clean lists" (a list of personal pension arrangements that transfers may be made more readily to because they have been established as not a scam as a result from ongoing due diligence. The Guide considers the risks of keeping a clean list and also the risks of not doing so. For example, where a clean list is used, a member could fall victim to a two-stage scam, where a member transfers to a legitimate scheme but plans to re-transfer from there to a scam arrangement. There are also risks in not using a clean list; by not using a clean list, there could be more work, delays, capacity problems at MoneyHelper, and greater administration costs, complaints, and referrals to the Pensions Ombudsman. If using a clean list, they should be diligently compiled and maintained.

The Guide also details the requirements of communication under the Regulations. Trustees must communicate certain information to the member at specific times during the transfer process. That includes when a request is made, where the Trustees need more information, if a referral to MoneyHelper is required, and when a decision on whether or not a statutory transfer can go ahead is made.

PART B: Discretionary Transfers

The main focus of the Guide is statutory transfers which are directly impacted by the Regulations and which provide a discharge to trustees. However, the Guide also includes guidance on the use of discretionary powers (where scheme rules allow). Whilst the Regulations do not apply to non-statutory transfers, trustees must still be mindful of due diligence. TPR's guidance, and the Guide, is very clear that Trustees should not use non-statutory transfers to avoid carrying out due diligence.

Situations in which Trustees might use discretion include a partial transfer, an enhanced transfer value exercise, or where a flag exists but due diligence indicates that there is no risk of a scam.

PART C: Further Guidance

Part C of the Guide provides additional guidance on matters including good governance, data protection, management information, and member appeals processes.

The Guide also directs scheme administrators to refer to the Pensions Administration Standards Association (PASA) guidance on Defined Benefit (DB) transfers, which provides recommendations on how to reduce transfer delays.

Administrators are advised to regularly provide scams materials, warnings, and signposting. The Guide emphasises the need for good record keeping and, in particular, administrators are advised to keep records of any concerns.

Finally, the Guide provides a list of resources and actions to take that pension providers should refer to if someone does fall victim to a pension scam. Administrators should report any concerns to the appropriate authorities as listed in the guide.


The Guide provides a framework for current best practices in identifying and responding to pension scams and is intended as an interim measure until the PSIG updates the Code.

As noted above, the DWP has committed to reviewing the Regulations and publishing a report within 18 months of the Regulations coming into force. We'll provide further updates in due course.

If you would like to discuss anything raised by this blog, please get in touch with a member of the team.


Jennifer Crawford

Senior Associate

Juliet Bayne


Sarah Keir

Trainee Solicitor