Regulator Warns Over Pension Transfers Amid Crisis

By Lucia Osborne-Crowley
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Law360, London (May 27, 2020, 12:18 PM BST) -- The chief executive of Britain's pensions watchdog has urged all trustees and savers to be extra vigilant about spotting investment scams and rushed transfer decisions as the coronavirus outbreak causes a surge in anxiety about finances.

Charles Counsell, head of The Pensions Regulator, said Tuesday that the COVID-19 pandemic could cause savers to make rash decisions to transfer their pensions. Trustees should be on their guard and ready to warn savers that a transfer might not be in their best interest, he added.

"COVID-19 may see savers rush into decisions about their pensions," Counsell said. "We don't want them to rush decisions which they may later regret or, worse still, become the victim of scammers."

Savers need to be confident that, if they choose to transfer, trustees will have their interests and the security of their benefits at the forefront of their minds, Counsell said.

Trustees should direct savers wishing to make transfers to the Financial Conduct Authority's ScamSmart website to help them avoid fraudsters taking advantage of the crisis to prey on vulnerable investors, Counsell said.

The watchdog instructed trustees who receive requests for cash-equivalent transfer values to send investors a letter signed by The Pensions Regulator, the government's Money and Pensions Service and the FCA warning them to carefully consider whether a transfer is the best option for them. Trustees provide the valuation to investors to indicate the cash value of their benefits, which is used to figure out how much they can transfer.

TPR reiterated that trustees are able to take more time than usual to issue valuations for cash transfer requests or in making transfer payments.

The watchdog said it will not take enforcement action against trustees who fail to meet the statutory deadline of three months to act on pensions transfers. They will have leeway until the end of June.

The regulator said it has asked trustees to monitor how many requests for transfers they are receiving, and to contact it if they are struggling to meet the demand.

Counsell stressed the importance of protecting pensions.

"Aside from perhaps owning a house, pensions are often the most significant asset held by individuals," he said. "Britain's pensions are worth around £6.1 trillion ($7.5 trillion), according to latest figures from the Office for National Statistics."

Investment managers warned in April that they have seen a jump in financial crime in Britain as fraudsters take advantage of the COVID-19 crisis to target vulnerable consumers.

The FCA has also warned consumers of the potential for COVID-19 to become a breeding ground for financial crime, and urged savers to be careful when making investment decisions.

The European Insurance and Occupational Pensions Authority has warned savers to look out for financial scams linked to the pandemic.

--Editing by Ed Harris.

For a reprint of this article, please contact reprints@law360.com.

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