The Association of Consulting Actuaries (ACA) has called for the proposals in the UK's Department for Work and Pensions consultation on regulations on dealing with pension scams to have detailed guidance from the Pensions Regulator and for sufficient time to be given to administrators, on behalf of their trustee clients, to adapt their processes to this new system.
In response to the DWP's 'Pension scams: empowering trustees and protecting members', ACA chair, Patrick Bloomfield said: "We welcome any effort to limit the opportunity for pension scams to succeed and we acknowledge that this proposed limitation on the statutory right to transfer has been a long time coming and has benefitted from the input of a number of stakeholders.
"Nevertheless, we find the proposed system complex with the potential to add risk to trustees of transferring schemes."
The ACA response highlights that the amber flags, which focus on investment and charges, appear to be harder to operate than the red flags as they are much more dependent on interpretation, despite the useful definitions of a number of terms used.
ACA Pension Schemes Committee chair, Peter Williams, added: "Guidance will be essential and even with comprehensive guidance trustees could be put to a lot of work in order to decide whether or not an amber flag exists. There is also a clear risk that the meaning of the various amber terms varies over time.
"We wonder whether a more streamlined mechanism can be made available under which trustees can require the member to take guidance, rather than have to reach a judgment as to whether or not an amber flag exists."
