The government has launched a consultation on measures to strengthen protections against pension scams and reduce pension transfer delays, including proposals to remove the overseas investment amber flag.

The consultation, published by the Department for Work and Pensions (DWP), forms the first stage of a wider government programme to tackle pension fraud and improve the operation of pension transfer regulations.

Currently, an amber flag, which results in a pension scheme member having to attend an appointment with MoneyHelper before a transfer can continue, is raised when overseas investments are part of the transfer.

The DWP said this has often been triggered by legitimate schemes investing overseas despite no evidence of scam activity.

The department revealed that more than a third of Money and Pensions Service (Maps) safeguarding appointments were triggered solely by the overseas investment flag.

'Reputable pension schemes' will be brought within the 'First Condition' under the proposals, aiming to allow more straightforward transfers to proceed.

Its consultation also proposed automatically block certain transfers into Small Self-Administered Schemes (SSAS) where there is no clear employment link between the member and the receiving scheme.

Under the proposals, a new 'red flag' would be introduced where evidence provided by a member does not demonstrate an employment link with the receiving scheme.

Where a red flag is present, trustees and scheme managers may refuse the transfer.

The DWP said the change is intended to address emerging concerns about the misuse of SSASs, which can offer members significant investment flexibility but have been identified as potential targets for fraudsters.

According to the consultation, there are around 60,000 SSAS members across approximately 21,000 schemes.

While SSAS-related fraud represents a small proportion of overall pension transfers, the DWP estimated that more than 100 transfers are made into SSASs each year and that up to one in 10 could involve fraud, although it suggested this is likely to be an underestimate due to under-reporting.

The consultation highlighted data from Report Fraud showing that the average loss from pension fraud was £18,400 in 2024/25, rising to £38,400 where an investment was identified as the primary vehicle for the scam, as is often seen in SSAS-related cases.

Pensions Minister, Torsten Bell, said: "Pension scams can rip away not just people's savings, but the retirement they are looking forward to. This government is determined to stay one step ahead of criminals who seek to exploit savers.

"Too often, we see fraudsters trying to trick workers into transferring their savings into bogus pensions. We are stepping in to automatically block transfers where the warning signs are flashing red."

Commenting on the proposals, Nucleus technical director, Andrew Tully, said the existing framework had often been applied too broadly despite being introduced with the "right objective" of protecting savers from scams.

"For example, transfers have been flagged due to 'overseas investments' even where individuals are simply investing in mainstream portfolios containing global equities - or, in some cases, where they simply had the option to invest overseas rather than any intention to do so," he continued.

"This triggered a requirement for members to engage with Maps, adding time, complexity, and friction to otherwise straightforward transactions.

"In these instances, the rules have gone beyond their original policy intent, creating poor customer outcomes. It is therefore a welcome and pragmatic step that the government is proposing changes to ensure the system is more proportionate and better targeted."

The consultation also proposes allowing members who have completed a Maps safeguarding appointment within the previous 12 months to avoid repeating the process when consolidating multiple pension pots.

In addition, the DWP is proposing to broaden the circumstances under which trustees can approve transfers to schemes they consider "reputable", giving them greater discretion to proceed with transfers where there is no identifiable scam risk.

The proposals follow a government review of the transfer regulations, which examined approximately 290,000 completed transfers.

The review found broad industry support for the framework and estimated that the regulations have prevented around 2,000 potentially fraudulent transfers since their introduction in 2021.

Commenting on the consultation, The Pensions Regulator (TPR) executive director of enforcement and executive general counsel, Gaucho Rasmussen, speaking on behalf of the Pension Scams Action Group (PSAG), said: "Fraud wrecks lives – and tackling it demands strong, coordinated action.

"Through the Pension Scams Action Group, which TPR leads, we are working closely with the DWP, law enforcement, the pensions industry and other partners to identify emerging threats and stop fraudsters in their tracks.

"The targeted safeguard proposed is an important step forward in protecting savers. We urge trustees and administrators to have their say."

The consultation runs until 21 July 2026 and applies across England, Scotland and Wales.

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