The regulations aim to identify and reduce risks associated with transferring pension benefits. This new law protects scheme members from the increasing threat of pension scammers who target pensioners, leaving them without their life savings. Following this change, the ceding (existing) scheme will be required to review the information provided by the new scheme to assess whether there are any potential risks that could suggest that the new scheme might be a scam. The legislation refers to these risks as red or amber flags.

The ceding scheme will assess for the following red flags (although this list is not exhaustive):

Red flag 1: The member has failed to provide the required information

Red flag 2: The member has not provided evidence of receiving guidance from Money and Pensions Service (MaPS)

Red flag 3: Someone carried out a regulated activity without the right regulatory status

Red flag 4: The member requested a transfer after unsolicited contact

Red flag 5: The member has been offered an incentive to make the transfer

Red flag 6: The member has been pressured to make the transfer

Where there is a red flag, the expectation is that the transfer will not proceed.

There is a wide range of circumstances which could be considered as amber flags, which the ceding scheme will assess for if there are no red flags.

Amber flags arise where the trustees or manages of the ceding scheme decide that:

• Some or all the evidence provided may not be genuine or may not have been provided directly by the member

• The evidence does not demonstrate the employment link or the residency link

• There are any high risk or unregulated investments included in the receiving scheme

• There are any high or unclear fees being charged by the receiving scheme

• The structure of investments included in the receiving scheme is unclear, complex or unusual

• There are any overseas investments included in the receiving scheme or

• There has been a sharp or unusual rise in the volume of requests to make a transfer from the transferring scheme, either to the same receiving scheme as that to which the current request to make a transfer is made or involving the same adviser or firm of advisers (or both).

The presence of an amber flag requires trustees to suspend the transfer and direct the member to MaPS for guidance. The scheme member will discuss the amber flags with MaPS, who will issue a reference number. This number must be provided to the ceding scheme if the member wishes to continue with the planned transfer.

Transfers to a public service pension scheme, an authorised Master Trust scheme or an authorised collective money purchase scheme can proceed without the ceding scheme having to assess for red or amber flags. Transfers to QROPS (qualifying recognised overseas pension scheme) must provide evidence that the member is a tax resident in the same country as the receiving scheme. If this condition is not met, this is an amber flag.

The Government is likely to review the new rules again in 18 months to ensure that they are effective in reducing the risk of pension frauds. There is concern that there may be delays in obtaining MaPS guidance which could lead to significant backlogs of pension transfers occurring.

Advice from Blacktower Financial Management

Our wealth management service provides a dedicated advisor to help you manage your retirement wealth. Should you be approached to make any changes to your pension provision, seek the advice of your wealth manager before making any transfers. We’ll work in partnership with you to identify the best option for your pension savings and we’ll regularly review your financial position to help you aim to achieve maximum return on investment. Contact one of the representatives at our Algarve office today for your free no-obligation discussion.

Blacktower in Portugal

Blacktower’s offices in Portugal can help you manage your wealth to your best advantage. For more information contact your local office.

Manuela Robinson is the Associate Director of Blacktower in the Algarve, Portugal, with offices in Quinta do Lago and Cascais.

Blacktower Financial Management has been providing expert, localised, wealth management advice in Portugal for the last 20 years. We can help with specialist, independent advice on securing your financial future. Get in touch with us on (+351) 289 355 685 or email us at

This communication is based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity.

Get in touch with us on (+351) 289 355 685 or email us at