3 practical ways advisers can support a pension transfer – and how IPM can help

You recently read a recap of the pension transfer regulations that were introduced in November 2021 and the traffic light “flag” system.

These rules have been introduced with an eye to further protect individuals from pension scams. While we believe that any regulation in this area is welcome, after dealing with these rules for almost 18 months we have found that:

• Many clients, advisers and planners are unaware of the impact of these new rules
• Pension providers are trying to incorporate these new regulations into existing “transfer out” processes, with mixed results
• In some instances, not taking these new rules into consideration has caused problems for clients as the transfer to an IPM SIPP has been delayed.

So, to help you navigate these rules and to support a client looking to transfer a pension, here are some tips.

Red, amber, green?

The first step for transferring schemes is to see whether the receiving scheme satisfies the first condition of the new regulations.

Schemes that cannot satisfy the first condition will then fall into the second condition. SIPPs will fall into this second condition. True bespoke SIPPs such as IPM’s could then be subject to an amber flag, depending on how the transferring scheme views the transfer and the types of investment that can be made in the new scheme.

In our experience, most providers are doing their best to implement the new rules and protect clients.

However, we are seeing a lack of consistency as to how the IPM SIPP is being treated under the flag system:

• Some providers put the IPM SIPP under an amber flag automatically
• Some allow a transfer to proceed without further delay
• Some providers treat us differently from one transfer to another!

On initial consideration of the rules, we can understand why providers may look at a transfer to the IPM SIPP as an amber flag. As a bespoke SIPP provider, we are able to consider a wide range of investments that, for example, platform SIPPs could not accommodate.

The reality is, however, that most clients will be transferring to the IPM SIPP to invest in traditional asset classes.

The reason for transfer is often:

• Consolidation of existing pensions
• Wishing to invest with a variety of investment houses under one arrangement
• Making an investment such as a commercial property.

Rather than exploring the reasons why a transfer is being made, transferring schemes have looked at the open architecture of our SIPP in the past and amber-flagged a transfer.

Consequences of the amber flag

Once a transferring scheme has amber-flagged a transfer to IPM, the client must seek guidance from Money Helper before the transfer can proceed.

This appointment must be made by the client. It is only the client that is able to attend the appointment – regardless of whether the client has received advice on the transfer, this is not something the adviser can assist with.

Only when the client can present evidence to the transferring scheme that they have had a consultation with Money Helper can the transfer proceed. Where a client cannot show evidence of a Money Helper consultation then this could result in a red flag and the transferring scheme blocking the transfer.

The issue that we hear from clients and their advisers is that it can be a number of weeks until a Money Helper appointment is available.

This will obviously lead to delays with the transfer as the client will not be able to present their evidence of the appointment to the transferring scheme until this has taken place.

For some clients, while the delay may be frustrating it may not present too much of any issue.

However, we have had instances where clients have wanted to take benefits or complete on a commercial property purchase but have been unable to do so as they have been unable to get a Money Helper appointment in a timely manner. Until they can, the transferring scheme will not proceed.

It is at this point we see clients starting to become understandably frustrated.

3 ways that an adviser/planner can help the transfer

As well as pension providers adapting their processes to take the new rules into consideration, there are three areas where we feel advisers can be prepare clients for how the transfer may play out.

1. Start the transfer process sooner

If there is a need for a transfer to complete in a timely manner, initiating the transfer advice process a few weeks earlier can help. This allows for any increased time the transfer takes because of the new regulations or delays in obtaining a Money Helper appointment, if required.

2. Speak to the transferring scheme about the transfer

If you can speak to the current provider to establish whether a transfer you are recommending will trigger an amber flag, this will allow you to advise the client as to the likely process they will need to follow to carry out their transfer.

3. Make the client aware of Money Helper

Money Helper is a government service designed to give guidance to individuals on pension-related scams and how best they can protect themselves.

Where a receiving scheme is deemed to have an amber flag, pointing clients to Money Helper during your transfer recommendation process can assist. Not only does this ensure a client knows where to go to receive this guidance, but it will also mean this is done at the earliest possible opportunity.

We can help support the transfer

As you have read, despite highlighting some difficulties we have seen as a result of these new rules being introduced, we support any regulations that help protect clients from pension-related scams.

That said, we can see the impact that these latest set of rules are having on a practical basis.

For those advisers and clients who have worked with IPM regularly, you will know that we always do our best to help. On this occasion we are limited in what we can do, as the onus is very much on the transferring scheme to lay out their requirements and for them to liaise with clients directly to satisfy these.

Some transferring schemes have contacted us to understand the nature of our SIPP and we are pleased that some are taking a pragmatic approach to working with us.

We have put together a transfer information pack (click here to request one) including the documentation that we are seeing transferring schemes request about IPM, over and above the usual request for confirmation of HMRC scheme approval.

You can email this pack to transferring schemes or clients should a scheme a client is transferring from want more information about IPM.

Request the transfer information pack here.

Included in this pack are the following documents:

1. HMRC evidence that confirms that the IPM Personal Pension Scheme (the IPM SIPP) is an open and active pension scheme
2. Information Commissioner’s Office evidence
3. Evidence that IPM are registered with the Pensions Regulator
4. A copy of IPM’s trust deed and rules
5. IPM’s fee schedule
6. IPM’s key features booklet
7. IPM’s standard asset list
8. Details of the assets IPM deem to be non-standard and our processes relating to this
9. Link to Companies House for IPM Personal Pension Trustee Limited (asset trustee of the IPM SIPP)
10. Link to Companies House for IPM SIPP Administration Limited (the operator of the IPM SIPP).

With all this said, for any transfer to IPM (or any other personal pension and SIPP) we are very much dependent on how the transferring scheme interprets the regulations and what approach they will take.

Advisers and clients finding this out as soon as possible is key in setting expectation levels as to how long a transfer is likely to take.

Get in touch

If you have a client looking to transfer their pension to IPM, we can help you to navigate this process. Please get in touch to find out more – email info@ipm-pensions.co.uk or call 01438 747151.