Government proposals to stamp out pension scams need greater urgency, according a leading industry body, as new figures show fraudsters continue to siphon millions of pounds.
On August 20, the government released what it described as “tough new measures to protect savers from pensions scams”, eight months after chancellor Philip Hammond first announced an intention to address the issue in last year’s Autumn Statement.
The new measures include:
- A cold-calling ban on pensions, including emails and text messages, to be enforced by the Information Commissioner’s Office.
- A tightening of HMRC rules to stop scammers opening fraudulent pension schemes.
- Tougher actions to prevent transfers from occupational schemes to fraudulent ones.
James Walsh, policy lead: engagement, EU and regulation at the Pensions and Lifetime Savings Association (PLSA), acknowledged the move was a step in the right direction, but said a plan of action was required.
“We need more urgency,” he said. “The risk is present every day. Every week people are losing their pensions to scams so we need to crack on with helping to protect them.”
The government did not provide further information on when the measures would be enforced, beyond saying they would be legislated for “when parliamentary time allows”.
This has raised concerns of an indefinite delay, particularly as Brexit occupies an increasing chunk of policymakers’ time in the coming months.
Kate Smith, head of pensions at Aegon UK, said the government “needs to keep the momentum going and legislate without delay”.
She added: “There’s still a lot of finer detail to be worked out, but this mustn’t be used as an excuse to put things off.”
New figures revealed in the announcement support the need for urgency. The Department for Work and Pensions said almost £5m had been unlawfully taken by scammers in the first five months of 2017.
The total figure is now estimated to have reached £43m since April 2014, with victims losing an average of £15,000.
An additional measure will aim to limit the transfer of pots between occupational schemes by ensuring that only active companies – defined as producing regular, up-to-date accounts – can register pension schemes.
The government has said this “will mean trustees must check their receiving scheme is regulated by the FCA, or has an active employment link with the individual, or is an authorised trust”.
Mr Walsh voiced concerns about the practicality of this move, suggesting PLSA members have already witnessed this type of activity.
He said: “There is a real problem that scammers will establish fake employment relationships where the person isn’t really employed at all, but ticks the boxes from a legal point of view. We don’t think this will really be an effective safeguard against scams at all.”
On a positive note, Mr Walsh was encouraged by the government’s commitment to follow through on previous promises to tackle scams. “If the government does all of the things proposed it will make a difference,” he said.
craig.rickman@ft.com
