Platforms back transfer reforms but warn over scheme proposal

An industry group representing 25 of the UK’s largest retail investment platforms has welcomed government proposals to simplify pension transfers.

However, it has warned that one key recommendation could create confusion and delays.

The UK Platform Group (UKPG) said it supports several measures in the Department for Work and Pensions’ (DWP) latest consultation on pension transfer regulations.

These include removing the overseas investment amber flag and exempting consumers from seeking Money and Pensions Service (MaPS) guidance if they have already received it within the previous 12 months.

The group said the proposals would reduce unnecessary bureaucracy and make pension transfers quicker and more efficient.

However, UKPG raised concerns about a proposal to allow transfers to “any reputable scheme”.

It argued that the term is too vague and could lead to inconsistent decisions across the pensions industry.

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According to the group, trustees, pension providers and administrators could each interpret the term differently. This could result in delays, disputes and different outcomes for consumers in similar situations.

Instead, UKPG wants the government to adopt a more objective standard. It has suggested replacing the wording with “any FCA-regulated scheme”.

Alternatively, it said ministers could introduce a clear set of criteria that schemes must meet. The group believes this would provide greater certainty for firms while maintaining strong consumer protections.

Julia Sage-Bell, senior policy adviser at PIMFA, welcomed the consultation’s overall direction but said the wording needed to be improved.

“The DWP has outlined a number of positive changes within this consultation which we believe will reduce unnecessary friction within the pension transfer process,” she said.

“While the DWP should be commended for its ambition to deliver better outcomes for consumers, we believe the use of the term ‘any reputable scheme’ may lead to negative, unintended consequences.

“In its current form, the term is inherently subjective, as what constitutes a ‘reputable’ scheme is likely to be interpreted differently by different schemes, trustees, administrators and other stakeholders.

“This creates a significant risk of inconsistent application, uncertainty for members and potentially unequal outcomes in otherwise similar cases.”

She added that adopting a clearer and more objective standard would give firms and consumers greater certainty.

It would also reduce operational risks and help ensure pension transfers remain efficient and consistent.