Providers must still take small pots seriously: Jenkins
Jamie Jenkins told FTAdviser that caution was needed about getting into a mindset where such sums are described as trivial with a “limited amount that can go wrong”.
He pointed out that while people may have only an average pot of £30,000 or £35,000 that may be to bridge them for a few years to get to state pension age, repay a debt or an outstanding mortgage.
“If they give it to somebody who steals it all and they get a tax bill too, that is a catastrophic event in someone’s life. They would certainly not look at that and say that’s alright because I only had £30,000 in the first place.”
Mr Jenkins remained very concerned about pension scams, saying that Standard Life has, for example, seen an increase in attempts to liberate pension money to places such as Gibraltar and Malta.
“There are some tragic cases, where people have signed documents giving the criminal access to their money and the documents have left them liable for the losses by dint of becoming of director of the company that becomes insolvent; that is horrific.”
At the end of last year, the firm warned that criminals were refocusing on those aged 55 and over who now have access via April’s pension freedoms. Even then, Standard Life had blocked around 400 suspicious transfers, totalling almost £14m, with 18 such transfers blocked in December alone.
In terms or preventing or policing against scams, Mr Jenkins said that the biggest defence is going to be awareness.
“At Standard Life, we stop a lot of transfers, but they are like shape shifters; they always come back in a different guise. What we need is to stop people being hooked in and never falling for the cold call.
“It does raise the question about banning cold calls. If you knew they were banned, that would be a good way of spreading the message, so no-one should call you about a financial product without you having got in touch.”
He added that one thing the UK might want to think about is the fact that in Australia an increase in pension wealth has also seen an increase in people prepared to get into debt, given they can use their pension to pay it off.
“One of their issues in Australia is that people’s belief in being well saved gives them a reason to get more into debt. If you think you have a big pile of money coming to you aged 55, you might get into debt. Could we use that foresight in the UK to see how we create some social norms so that people don’t spend even quicker?”
As for trends since the at-retirement reforms were introduced, Mr Jenkins said that it is still too early to tell what most people are doing with there money.
“Much of what we are looking at is based on people who cashed in. There was pent up demand, but that was from people who knew what they wanted to do and had plenty of time to think about it, so it is no wonder many of them didn’t use Pension Wise or take advice.
“What are the 95 per cent that haven’t yet done anything going to do?”
peter.walker@ft.com
