Skip to content

Defined Benefit Transfer Warning Flags Explained


    Defined Benefit Transfer Warning Flags Explained

    Transfer Warning Flags can be raised by Defined Benefit pension scheme administrators as part of enhanced safeguarding checks for transfers. Find out what they are, whether you should be concerned and what to do if your pension transfer raises a warning flag:

    The ongoing battle against defined benefit pension transfer scams has played a huge role in the financial landscape; not least in recent years. In November 2021, new legislation saw major changes come into place for pension trustees. These changes meant that trustees would have more power to protect people from pension scams and that more tests would be done to clamp down on illegitimate or inappropriate pension transfers..

    As part of the new legislation, enhanced due diligence measures now mean that all pension transfers must go through an assessment process to show whether there are any red (heightened risk) or amber (potential risk) flags of a pension scam.

    What are Transfer Warning Flags?

    A transfer warning flag is a sign that a defined condition or pension transfer requirement has not been met for a defined benefit pension transfer. A transfer warning flag may also signify signs of a pension transfer scam.

    There are defined conditions and requirements that pension transfers must pass in order for a defined benefit transfer to go ahead. If they don’t meet the required criteria then a Transfer Warning Flag is raised.

    Pensions regulators have identified several safeguarding areas and issued a list of amber and red flags that require further investigation or clarification before you will be able to transfer your pension. These should not be ignored: they’ve been put in place to ensure that any potential transfer is in your best interests. While these extra precautions mean that pension transfers are typically taking longer, they work to protect people from scams: scams that can wreck lives and dissolve hard-earned retirement funds in an instant.

    The full list of ‘red flag’ conditions includes:

    1. The member has failed to provide the required information
    2. The member has not provided evidence of receiving mandatory guidance from MoneyHelper
    3. A person may have carried out a regulated activity for the member relating to the transfer without the appropriate regulatory status
    4. The member has requested a transfer after unsolicited contact
    5. The member has been offered an incentive to make the transfer
    6. The member has been pressured to make the transfer

    If a red flag does crop up, it stops a transfer in its tracks. While it doesn’t necessarily mean an immediate cause for fear, it could be a cause for concern. Either you’re missing information or in the worst case, there might be signs of a scam or some type of illegal activity (such as cold-calling, cashback incentives or unauthorised and unregulated advice).

    transfer warning flags_magazine article by 2020 financial

    What do the warning flags mean?

    A warning flag shows that there could be a possible cause for concern with your transfer. This will either show up as a red or amber flag: red meaning that there is a heightened risk and amber that there is a potential risk.

     With an amber flag, the transfer can still proceed but only if the member provides evidence that they have taken spam-specific guidance from MoneyHelper. If not, the flag will be escalated to red, meaning the transfer cannot go ahead. 

    If you get a red flag, you’ll be required to have a call with MoneyHelper to discuss the potential issue/s. You may be required to provide more information and If your pension scheme administrator is still concerned, they may block the transfer for your own financial safety.

    Consequently, with these additional checks, it is far harder for pension scammers to slip through the cracks and considerably more important for trustees to do sufficient due diligence.

    Does a warning flag mean I’m being scammed?

    A warning flag does not necessarily mean you are being scammed. For starters, it depends on the colour flag you receive:

    Red flags

    A ‘red flag’ is raised where there are very clear signs of fraud or methods that are frequently and typically administered by scammers. Red flags halt transfers.

    Amber flags

    If a potential scam is suspected – but less certain – it will receive an amber flag. Your scheme administrator will pause your transfer until you’ve had a call with MoneyHelper to clarify the risks involved.

    What both flags mean is that it’s time to stop: pause and look at the options in front of you. Do you truly understand the nature, the risks and the outcome of your pension transfer? Check the investments and people you are dealing with. Is every single one of them authorised and regulated? 

    If not, your money could disappear – it’s as simple as that. These warning flags are a safety net: yes, they can make the process more drawn out, but the pay-off is worth its weight in gold.

    How do I know if there are any warning flags on my pension transfer?

    You will know if there are any warning flags on your pension transfer as your pension scheme administrator has a duty to tell you: they are required to apply safeguarding checks based on the information you provide them with and they should flag anything of concern to you and refer you to MoneyHelper for more information.

    It is imperative that your scheme administrator can show proof of updated transfer processes and allocated responsibilities for decision making. They should also be able to provide you with ‘low risk’ transfer options and give clear and well thought out recommendations based on any potential flags.

    The key is that you are not – and should not – be in this alone. 

    Where can I find guidance on Pension transfer Warning flags?

    It can be confusing to know what you need to do if a pension transfer brings up a warning sign: especially since recent statistics indicate that 2 in 3 transfers raised a warning sign in early 2022. However, there is a lot of help (plenty of it free) to get you started.

    MoneyHelper is your first port of call as this is the service that you need to consult should a warning flag arise. MoneyHelper is the amalgamation of the government-run PensionWise, The Money Advice Service and The Pensions Advisory Service. 

    If your concerns actually rest with your Financial Advisor, you can check the FCA list of known unauthorised firms and individuals to check whether they are a known scammer. The FCA continuously adds firms to this list as soon as they are made aware of them, but don’t assume that a firm or individual is officially registered and authorised just because you can’t see them on the list.

    Likewise, you can take a look at the FCA warning list of known scam investments and opportunities.

    In addition, we strongly recommend reading the Pension Transfer Gold Standard consumer guide from the Personal Finance Society. It lays out best practices for Defined Benefit Pension Transfer and what you should expect as a consumer. The advice has been developed to help you:

    • Make an informed decision as to whether a transfer is the right choice for you
    • Understand what good advice in this area should look like
    • Find an advice firm which has already adopted the Gold Standard 

    MoneyHelper has compiled a helpful directory of authorised advisors who hold the Pension Transfer Gold Standard – so, if you’re unsure where to begin, choose someone from the list. 

    Most important of all. if you feel uncomfortable about any part of your pension transfer DON’T DO IT! The risk is not worth it, and the number of scammers out there is not to be underestimated. Speak to MoneyHelper for guidance or seek a second opinion from an authorised firm.

    Defined benefit pension transfer specialist simon garber at 2020 financial

    What do I do if I get a warning flag on my Pension Transfer?

    If you get a warning flag on your pension transfer, the first thing to do is speak to MoneyHelper or your Financial Advisor. The flag could require something as simple as further clarification or some extra information.

    If, however, the warning flag is in relation to your financial advisor – such as that they don’t have the required authorisations – then you need to stop all activity immediately and seek advice from an authorised firm. 

    If you feel you are being coerced by a financial advisor or pushed into making a decision you aren’t 100% comfortable with, speak to your pension scheme administrator – they have the power to block a transfer if they have safeguarding concerns. You should also report your concerns to the Financial Conduct Authority, they have legal powers to stop unethical practices.

    REMEMBER: If you are being scammed it is often impossible to get your money back once a transfer has taken place. If you are in any doubt whatsoever, hold off on the transfer and speak to MoneyHelper about your different options, or seek a second opinion from a Qualified Pension Transfer Specialist.

    Remember,  You do not have to transfer your pension. If in doubt, stay in your scheme!

    Where can I get pension transfer advice?

    The best place to find pension transfer advice is from a Qualified Pension Transfer Specialist like 2020 Financial. Despite the push to send consumers to organisations like MoneyHelper, they can offer general guidance on pension transfers. This means they can only tell you what your options are, and not whether the options are suitable for you.

    If you want to know if a pension transfer is suitable for you, you’ll need to pay for tailored advice from a Qualified Pension Transfer Specialist. This advice will be fully bespoke and impartial so that you can create a clear and strategic action plan. You can find a list of authorised Defined Benefit Pension Transfer Specialists on the MoneyHelper website. This directory is an excellent resource and starting point.

    If you’d like to speak to our qualified pension transfer specialist you can book a free, no-obligation call here. We are pension transfer experts and are here to help you get the most out of your pension so that you can have a stress-free financial future. 

    Simon Garber

    Simon Garber

    Simon Garber, DIP PFS, runs 2020 Financial Ltd. He's an Independent Financial Adviser and Pension Transfer Specialist with over 20 years of experience. He's FCA registered, a member of the Personal Finance Society and holds the coveted Gold Standard for Defined Benefit Pension Transfer Advice.

    He is the Managing Director of 2020 Financial Ltd, Financial Advisors specialising in Retirement Planning & Wealth Management, based in Southampton, Hampshire.

    Download our free expert guide to

    Defined Benefit Pension Transfer

    Is a transfer really right for you?  Uncover everything you need to know before you decide to transfer your pension

    Please enter your name.
    Please enter a valid email address.
    Something went wrong. Please check your entries and try again.

    If you liked this article you may enjoy ...

    Why are pension Transfer Values falling Index

    Why are pension transfer values falling?

    Simon garber looking at Pension protection fund website

    What is the Pension Protection Fund?

    Defined benefit transfer timescales magazine article_2020 Financial

    Defined benefit pension transfer timescales 2023

    Share this article ...

    Looking for transfer advice?

    Our pension transfer specialist is on hand to offer qualified advice on all types of pension transfers. Find out if a defined benefit transfer is right for you

    Scroll To Top