The Pensions Administration Standards Association has finally published its code of good practice on combating pension scams, on the same day as the Pensions Regulator refreshes its campaign to warn of potential fraud, as the industry tightens defences in the run-up to the pension freedoms.
Pasa’s code is designed to set out best practice for administrators on transfer requests to help mitigate the threat of pension liberation, that is transfers to schemes which allow access to a person’s fund and which can give rise to penalty charges of 55 per cent.
Of course, from April these standards could become largely redundant as reforms will allow savers to legally access funds.
Those behind the schemes are often seeking to persuade savers to transfer to apparently high yiedling investments. Once new rules come in they will simply need to persuade scheme memvers to access their funds as they are entitled to do and invest the proceeds.
Among other measures to prevent people losing out, individuals will have access to free guidance, providers are being required to issue tailored warnings to savers requesting cash, and regulators have stepped up their general anti-fraud efforts.
FTAdviser previously revealed the code was delayed for the second time in January as elements of the guidance werre being reviewed in light of the landmark Pensions Ombudsman decisions and ahead of new pension freedoms in April.
Margaret Snowdon, chairman of Pasa and the industry group, labelled the code as a “milestone” in setting standard due diligence to follow when considering a transfer request.
The three main principles are that trustees, providers and administrators should:
• raise awareness of pension scams for members and beneficiaries of their scheme;
• have robust, but proportionate, processes for assessing whether a receiving scheme may be operating as part of a pension scam and for responding to that risk; and
• generally be aware of the known current strategies of the perpetrators of pension scams in order to inform the due diligence they need to undertake and refer to the warning flags as indicated in the Regulator’s guidance, Financial Conduct Authority alerts and Action Fraud.
Separately and as part of general efforts to toughen wider defences, The Pensions Regulator has also refreshed its ‘scorpion’ campaign to alert retirement savers and pension scheme trustees to the risks of scammers.
It provides guidance for pension scheme trustees, including a check list of scam hallmarks and signposts to a new code of good practice that sets out due diligence processes to combat pension scams.
Steve Webb, pensions minister, said: “We are taking tough action along with our partners to tackle this scourge, but people must be vigilant. To get genuine guidance on your options, people should contact the free and impartial Pension Wise service.
“If you are cold called by someone offering you a free pensions review, it’s probably a scam so put the phone down.”
emma.hughes@ft.com
