Standard Life and Aegon have exclusively revealed to FTAdviser the scale of the pension scam nightmare facing providers since pension freedoms saw fraudsters increasingly try to rip off savers.
Since April 2015, Standard Life has stopped 128 transfers with a value of £7.2m and in the last tax year the life office refused 74 transfers with a value of £2.3m because of pension scams.
In 2016 131 scams were also stopped by Aegon to the value of £3.04m.
This figure is based on transfers that were declined because of either a scam risk or a transfer request that has been withdrawn by the customer following Aegon's intervention.
Phoenix last week also revealed that since April 2013 it has prevented 1,393 pension scam transfers, with a value of £29.14m.
Despite the fact that pension providers are viligant, sadly, not all scammers were stopped.
According to figures revealed by the City of London Police last week, £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.
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.
Jamie Jenkins, head of pensions strategy at Standard Life, said: “Most pension providers are carrying out considerable checks to identify any suspicious transfers or fraudulent schemes, and many transfers are being stopped as a result.
"However, with people now able to access their pension savings at the age of 55, we are seeing renewed attempts by scammers to target those who have already released a cash sum from their pension.
"Often the scams take the form of high risk or simply bogus investments. Advisers are very alive to this growing problem and play a key role in ensuring their clients aren’t being duped by offers that are – quite literally – too good to be true."
Kate Smith, head of pensions at Aegon, said the provider is aware that scams are constantly evolving and scammers are becoming increasingly sophisticated in the ways they’re targeting people's money.
She said: "It’s crucial that we, as an industry, keep up with the scammers and remain vigilant about potential threats to people’s life savings. Savers must also be cautious, firms promising high returns or early access to pension savings are often scams, and if they do get roped in it could be only a matter of seconds for a lifetime’s savings to disappear.
“We have a robust procedure in place to identify potential scams at all stages of the transfer process and our specialist financial crime team carries out due diligence to ensure the integrity of all transfers and ultimately protect our customer’s money.”
Prudential were not able to provide figures on the number of scams they have prevented but David Gwyer, PR manager of the provider, said: "Once customers drawdown their pension funds, providers are not aware of how these customers use this money or if they subsequently become the subject of fraudulent activity.
"At Prudential we use a series of measures to help our customers understand the increased risk of fraud, particularly following the introduction of pension freedoms, warning them about potential scams while also including the The Pensions Regulator's ‘scorpion’ leaflet in all ‘at retirement’ packs and annual statements.
"A dedicated web page provides customers with guidance on how to spot a scam, links to the FCA authorised firms register and list of overseas unauthorised firms."
Similarly Aviva was unable to provide statistics on the number of pension scams it has thwarted.
Fiona Whytock, senior media relations manager at Aviva, said: “The vast majority of pension transfers requests raise no concerns and are completed efficiently by our processing teams.
"We have stringent controls to protect our customers’ retirement savings and if necessary we will refuse suspicious transfer requests.”
Steve Webb, director of policy and external communications at Royal London, equally was unable to provide figures on the number of Royal Life customers who have been targetted by scammers.
He pointed out that "while some scams are essentially theft and are cut-and-dried, others are in a greyer area where, for example, someone transfers money into an unsuitable investment or a high-charging scheme or one which doesn’t deliver the promised returns, and we wouldn’t necessarily hear about this as a provider."
He also referred to the case of Hughes versus Royal London, where the mutual tried to protect a member where it had concerns about a proposed pension transfer.
Royal London blocked the transfer and the decision was upheld by the Ombudsman and the High Court.
But Royal London's decision to block the transfer was then taken to appeal and the provider's move was overturned.
"We feel that this undermines our ability to protect our members when we think they are at risk of being scammed.
"In the HM Treasury consultation on ‘cold calling’ there was a welcome reference to potentially strengthening the hand of providers in such cases and we would welcome this.
"We also support the early implementation of the ban on cold calling," Mr Webb adds.
stephanie.hawthorne@ft.com
