Govt urged to give pension firms greater powers to tackle scams

The People’s Pension (TPP) and The Police Foundation (TPF) have called on the government to provide pension companies with greater powers to tackle pension scams.

Their joint report, Protecting people’s pensions: understanding and preventing pension scams, found that 938 customers from 13 providers with combined savings of £54m were targeted by potential scammers in 2019.

According to TPP and TPF, an independent think tank focused on improving policing, 62 per cent of these savers insisted on the transfer regardless of the risk, with £31m potentially lost.

To help tackle the growing issue, TPP and TPF have urged the government to give firms the power to trigger an “urgent regulatory response” to those at risk of fraud.

They also called on the government to enable regulators to override the statutory right to transfer if a suspected scam is reported to them and to ensure that victims of scams are not hit with tax penalties, as is currently the case.

“Currently, pension providers can flag a potential scam to a customer, but we can only stand by and watch if the individual chooses to proceed with a risky transfer that could result in them losing all their savings,” commented TPP director of policy, Phil Brown.

“We’re calling on the government to provide pension providers and regulators with the powers to stop risky transfers and ensure victims of fraud aren’t hit with having to pay tax penalties on their lost savings.”

TPP and TPF called for a broader definition of pension fraud to help ensure that crime data provides an “accurate picture” of the issue, and for a central database to be established for a more systematic collection and analysis of intelligence.

They also recommended for police investigators to be supported by specialist fraud victim support services, such as that provided by the National Economic Crime Victim Care Unit, to help manage, assess and support vulnerable victims of fraud, and facilitate engagement with the criminal investigation.

TPF director, Rick Muir, added: “We can’t arrest our way out of pension and investment fraud and that’s why efforts at the front end to prevent scams are so important.

“Nonetheless, in terms of financial losses and overall wellbeing pension scams are among the most harmful types of fraud and it is therefore vital that they are taken seriously by law enforcement.”

The Pension Scams Industry Group (PSIG) helped develop and administer the survey to pension firms, supported by the Association of British Insurers (ABI), the Pensions Administration Standards Association (Pasa) and the Pensions and Lifetime Savings Association (PLSA).

PSIG chair, Margaret Snowdon, commented: “As we all know the issue of pensions scamming is not going away, if anything it is on the rise as more and more questionable individuals have recognised the extreme vulnerability of pension scheme members. This has only increased during Covid when finances for some have become even more strained.

“PSIG is absolutely committed to working with TPF, and with Project Bloom, to progress the recommendations outlined in the report and we commend them for this excellent report. We must afford our pension scheme members the protection that they deserve, this project takes us a step closer to that.”

The Pensions Regulator (TPR) welcomed the report, with a spokesperson for the regulator saying: “Pension scams devastate lives. On average a victim loses £82,000. Once that money’s gone, it can be gone forever.

“TPR and its Project Bloom partners are dedicated to stopping scammers. We are working together to tackle scammers head on, using our powers to investigate and prosecute. We will continue to bring scammers to justice."

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