The Treasury said pension scam activity is particularly focused arounds transfers to apparently legitimate pension schemes.
These schemes are established or operated by fraudsters for the purpose of encouraging people to investment in unregulated investments, such as exotic or too-good-to-be-true opportunities that collapse.
Under the consultation, the government proposed limiting the statutory right to transfers:
- Where the receiving scheme is a personal pension scheme operated by an FCA-regulated firm or entity;
- To authorised Master Trust schemes (authorisation regime to be rolled out in late 2018); and,
- Where a genuine employment link to the receiving occupational pension scheme could be evidenced.
The consultation response, published Monday, said that the vast majority of respondents agreed with the government’s proposal and most did not think additional criteria were needed.
Many highlighted, however, the need to ensure legitimate transfers were not blocked unnecessarily.
Some respondents flagged that the proposals would mean that people would not have a statutory right to transfer to overseas pension schemes, such as Qrops.
Figures from HM Revenue & Customs show that there are between 10,000 and 20,000 such transfers each year.
However, several respondents specifically identified Qrops transfers as a concern for pension scams.
In the response document, HM Treasury said: “The government does not wish to prevent legitimate transfers to overseas pension schemes. It will, therefore, consider how best to extend the criteria under which there is a statutory right to transfer to include legitimate transfers to Qrops.
“In this context, the government notes the tightening of the rules around the tax treatment of transfers to Qrops announced in the recent Spring Budget, and will take that into consideration.
“In addition, it will also factor in legislation that took effect from April 2017 that means that if neither an overseas non-occupational pension scheme nor its provider is regulated it cannot be a qualifying overseas pension scheme or a Qrops.”
The government confirmed it will liaise with industry and other stakeholders on this issue during the course of this year.