Following the City of London Police's disclosure of the scale of pension fraud, Phoenix has revealed that since April 2013 it has prevented 1,393 pension scam transfers, with a value of £29.14m.
Fraudsters are getting smarter and use a myriad of methods to reach and trick their victims.
Shellie Wells, head of corporate communications at Phoenix Group, said: "The government’s potential ban on cold calling, which has been put on hold due to the general election, should be a high priority, but if it is to tackle fraud effectively Phoenix believes that it should be extended to include all forms of electronic communications such as email and text messaging."
According to the City of London Police data provided to the Financial Times, £8.6m in losses were reported by 24 victims of pension fraud in March, a sharp increase on the £779,000 reported by 12 individuals the month before.
A total of £13m in losses were reported from March 2015 to March 2016.
In total, more than £42m has been lost to “pension liberation fraud” since April 2014, when the pension freedoms were unveiled by George Osborne, the former chancellor.
Victims of “liberation fraud” are often swindled into placing their pension funds in investments that do not exist, are illiquid or incapable of delivering the promised returns.
They are also usually not warned about the tax for “liberating” their pension funds before age 55, which can wipe out half the value of the retirement pot.
Darren Cooke, director of Red Circle Financial Plannning, — who launched a petition that led to the government announcing it would ban “cold calling” in relation to pensions — said the sharp increase in reported losses in March was likely due to scammers “ramping up” their activities following publicity of the government’s plans to put a stop to their activities.
Andrew Pennie, head of pathways at Intelligent Pensions, said: “While pension freedoms give choice and opportunity like never before they also come with increased complexity and risk.
"The worst of these risks is pension scams, with ever increasingly sophisticated and persistent scammers after peoples hard-earned pension savings.
"Furthermore, where people lose their pension savings to a scam, the chances of recovering any of their money is remote. Regulated advice is the safest way for retirees to avoid being scammed by fraudsters or by their own actions.
"Employers need to do more, using their scale and resource, to provide employee advice solutions, whilst schemes and providers must do more to promote and make available the new pension advice allowance (PAA).
Preventing scams is also a high priority for the Pensions Advisory Service.
Michelle Cracknell, chief executive of the free government guidance body, says: "We are receiving more calls from individuals who think they may have been contacted by scammers."
However, she said even if cold calling is banned, that will not be effective as the scammers will simply go offshore.
Ms Cracknell said: "The best protection of all is consumer awareness."
stephanie.hawthorne@ft.com
