The Pensions Regulator is using the stories of victims of pension as a warning of the devastating effect of losing thousands of pounds in retirement savings because of fraudsters.
The TPR has updated its ‘Scorpion’ campaign, to be more hard-hitting with the words ‘pension liberation’ replaced by ‘pension scam’.
Consumers are being told to be suspicious of cold calls, text message spam or website offers which claim to be able to help them cash in their pension.
Pension trustees and providers will be urged to include leaflet in annual statements sent to members, or anyone who requests a transfer in the meantime.
The known amount of funds paid into pension scams now stands at £495m in total, and could be substantially higher.
Victim stories include one woman, whose 40-year-old son took his own life after not receiving a promised £17,000 lump sum following the transfer of his £42,000 work pension.
Another 49-year-old scam victim, who is potentially facing an £18,000 tax bill and risks losing her home after falling victim to a pension loan scam.
Pension scams may sound legitimate but there is a high risk that once members release their funds in this way, their money will be moved into dubious investment arrangements, often overseas and unregulated..
Members are often not properly warned that if they access their pension pot before the legal minimum age of 55, they face high tax charges and those arranging the transaction will cream off a significant percentage as fees.
Steve Webb, the pensions minister the government was working with the industry to stamp out the schemes.
Andrew Warwick-Thompson, executive director at the Pensions Regulator said: “The only people who benefit financially from the arrangements are the scammers themselves.”
Peter Dyer, chairman of the Pensions Administration Standards Association policy and strategy sub-committee, said: “Over the last couple of years pensions administrators have taken careful measures to identify potential liberation frauds, only to feel frustrated that they cannot prevent members proceeding with a transfer which clearly is not in their best long-term interests.”
Steve Hyndman, head of financial crime at Phoenix Group, said: “We are really pleased to see that the term for this has moved from pensions liberation to pension scams – because that is exactly what it is, a scam. We have been actively involved in preventing pension fraud and, to date, we have prevented 668 people from losing a total of £13.3m.””
Ben Fairhead, a senior partner at law firm Pinsent Masons and a member of the Pension Liberation Industry Group said: “The new campaign reflects the desire to highlight that pension schemes offering pension liberation are very often simply ‘scams’, a word that the Regulator hopes will resonate with the public more than the misleadingly upbeat-sounding ‘liberation’.”
