The UK government introduced new regulations from November 30, 2021, that restrict pension transfers in certain circumstances. If you're wondering why the statutory right to transfer pension removed clause has caused confusion, you're not alone. These new rules aim to help trustees prevent fraudulent or inappropriate transfers by requiring them to verify whether statutory rights apply before approving any Defined Benefit (DB) or Defined Contribution (DC) transfers. Trustees now have added responsibilities to make clear yes-or-no decisions on eligibility, although schemes with discretionary powers may still approve transfers in some situations.
At Cameron James we always thrive to provide you with the latest updates from the UK Pension Industry. Watch the video below to understand everything you need to understand as explained by our CEO and Independent Financial Adviser, Dominic James Murray.
🎥 Check out our YouTube channel for more expert guidance on UK Pension Transfers
How Do These Rules Affect QROPS?
The implementation of these rules also affects QROPS (Qualifying Recognised Overseas Pension Schemes). The UK government now requires individuals to demonstrate residency in the QROPS country. This requirement, tied to the statutory right to transfer pension removed changes, places additional burdens on individuals living abroad who are simply trying to protect their pension from tax inefficiencies.
Today, Malta hosts over 95% of all QROPS. However, with such a small population, the residency requirement feels impractical. For many clients living in France, Germany, Switzerland, Portugal, or Italy who are approaching the Lifetime Allowance, QROPS has been a useful strategy to avoid unnecessary tax. Under the new rules, you’ll now need to prove you’re a resident or have a genuine employment link with the country where your QROPS is based.
The Positive Side
Despite the additional challenges, the intent of the UK government and the Department for Work and Pensions (DWP) is to protect investors from scams and poor advice. The introduction of amber and red flags helps trustees identify suspicious activity before transfers are made.
An amber flag is displayed when:
- The member gives incomplete or inconsistent information.
- Trustees suspect forged documentation.
- The receiving scheme includes unregulated or high-risk investments.
- The member has no proven residency or employment link to the scheme’s jurisdiction.
- Charges or fee structures are excessive or unclear.
When an amber flag is triggered, members must consult with MoneyHelper, the government’s impartial pension guidance service. After the consultation, they will receive a unique reference number that must be shared with the scheme trustees before the transfer can proceed.
The Negative Side
While the intention is to protect pension holders, these rules can create hurdles for genuine cases. The UK pension industry is worth hundreds of billions of pounds. Some believe that pension providers may be lobbying for rules that reduce outflows, meaning they keep assets under management for longer.
A red flag automatically denies the transfer request. These include:
- The member fails to provide required information.
- An unregulated individual performs a regulated activity.
- The transfer follows unsolicited contact or marketing.
- The member is offered a reward for transferring.
- The member feels pressured into the transfer.
How Cameron James Can Help You
These rules are not temporary. Once the UK government implements policies like this, they rarely reverse them. With the statutory right to transfer pension removed in many cases, you must work with a highly experienced adviser to avoid missteps. Simple mistakes can cost you thousands of pounds in lost time, fees, and denied transfers.
At Cameron James, we are specialists in UK pension transfers. We help expats and UK residents alike navigate the complexities of DB and DC pension schemes, QROPS, and all related regulations. Don’t let avoidable errors block your financial future.
📞 Secure your pension transfer with confidence, speak to a Cameron James adviser today.