Pension Schemes Act 2021 gives trustees power in the fight against pension scams

What you need to know

• Until now, all members of defined benefit pension schemes who are more than a year away from their normal retirement age have broadly had an automatic statutory right to a transfer value.
• The Pension Schemes Act 2021 (the Act) imposes conditions on this statutory right, intended to combat the rise in pension scams.
• The conditions themselves are yet to come into effect as they need to be introduced by secondary legislation. The Act suggests conditions related to employment or place of residence, although it does not restrict them to those areas.
• The Department for Work and Pensions (DWP) is currently drafting the legislation to introduce these conditions, focussing on the key red flags that indicate a scam and are possible to regulate. A consultation is expected shortly, with legislation expected to come into force in autumn 2021. From this point, trustees will be able to block transfers which satisfy the conditions.
• These developments are a positive step in the fight against pension scams. Trustees will need to ensure their processes are sufficient to implement these conditions.