"Nobody is safe": the In Focus Q&A on pension scams

FTAdviser: We know pension scams exist, but how bad is the situation?

Helen Morrissey: I think the situation is far worse than we credit. During the [Work and Pensions Committee's hearing on January 6 as part of its inquiry into pension freedoms and protecting pension savers] the figures reported were quite scary. Roughly 30,000 websites have been taken down, and 545 scams reported last year to law enforcement... but we need to understand that while some are reported, much is under-reported. 

FTA: Why is that?

HM: There is a lot of shame associated with scam activity and we underestimate the effect of this. People feel like they have lost their money not because someone has swindled them, but because they feel they have been stupid. The numbers of scams are high and the amount lost is in the millions, but I think this is only a portion of what is actually going on out there. 

FTA: Has Covid-19 given more bandwidth to scammers?

HM: Scammers are such shape-shifters. They evolve so quickly depending on the situation. I remember when pension freedoms were announced [in 2015], I was only in my 30s. And within a week of the freedoms, I was getting text messages asking if I wanted to access my pension early. Scams evolve so quickly and they have with Covid, as well.

For example, some people have been bombarded with text messages for Covid tests that they paid for but never arrived and now, with people concerned about their financial futures, scammers are exploiting that, too. It might not have got worse, but shows how quickly these scams evolve.

These scammers are not just targeting our customers: they are targeting the customers of other providers, so we need to work together. -- Helen Morrissey

FTA: Has loneliness been a factor?

HM: These fraudsters really work to get people's confidence. They come across as the victim's friend and people don't want to be rude. People have to be encouraged to put the phone down and stop the conversation. Everybody is vulnerable to it, and they need to be aware.

The pandemic has probably exacerbated it, but it has always been a factor. Royal London did work a couple of years ago showing that these scammers have almost turned these elderly people against their families. Fraudsters jump into that 'gap' whereby elderly people might live far away from their families and prey on that. 

A lot of people who are elderly are very trusting and can be manipulated in this way. Many of them are unaware that such things exist. Because I work in this industry I know whether voice mails are scams but if someone left messages [pretending to be from HM Revenue & Customs, for example] on my mum's phone, she would be scared.

Helen Morrissey, pensions specialist for Royal London: "The scary thing is, nobody is safe."

FTA: Who is most at risk of scams?

HM: The scary thing is nobody is safe. As I said earlier, I was in my 30s and getting messages about pensions reviews. If I didn't know what the hallmarks of a scam were, I might have picked up the phone to those people. 

With pension scams, we think it is the elderly who are affected - and indeed they will be if they are over 55 - but younger people cannot think they are not at risk.

What I would like to hope is that the advised population, if they are being approached by people offering investments, will discuss any activity like this with their advisers. 

FTA: What is the industry and the government doing?

HM: There are enormous things going on. The WPC is focusing on this heavily right now. Law enforcement and the regulators are combating scams, and there is the pensions bill going through parliament now, which is looking at powers to stop pension transfers, for example. There is a lot going on in the background to protect people but we also need to be aware of two particular things. 

One, we need to be more co-ordinated in our response. The regulator has done some great work but the scope for information sharing to really support the whole effort is great. 

Two, industry, the government and law enforcement have been doing great work [to tackle scams], but the general public do not really know what is going on. So while much work has been done, there are still too many people who don't know what the hallmarks of a scam are, so we need to promote these key messages.

FTA: What more can providers and advisers do?

HM: There has been a lot of work in the pensions schemes bill and elsewhere to provide safeguards. For example it aims to give providers the right to hold up a transfer and look into it, but people might not realise that, if we are holding a transfer up, we are actually looking to protect them, not to keep hold of their money. That's a difficulty as well.

Royal London is stepping in where there are concerns, and to work with advisers to make sure the transfers that go through are going to reputable sources, but in the future we all need to work together more.

These scammers are not just targeting our customers: they are targeting the customers of other providers, so we need to work together and share information with each other to make sure we are doing everything we can to protect people. 

We also need to work with advisers and our customers to show them what a scam looks like, so they can be aware, and help them report it to Action Fraud. This will help us shut them down quickly.

Simoney Kyriakou is senior editor for FTAdviser