Pension scams steal £1bn from savers

Pension scams steal £1bn from savers

Pension savers have lost more than £1bn to scams, according to the chair of the Pensions Administration Standards Association (PASA).

Speaking at the Pensions and Lifetime Savings Association (PLSA) conference in Manchester today (19 October), Margaret Snowdon said “official statistics can really be under reported”.

According to the latest data available from the government, it is estimated that £43m has been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of nearly £15,000.

But Ms Snowdon said: “People are very reluctant to say that they have been scammed, they don't all come forward.”

Ms Snowdon got to the figure of £1bn “by talking to insurers, administrators and trustees that have paid for transfers that they think are suspicious”.

According to data from Xafinity, scammers could be involved in one in 12 pension transfer requests.

Ms Snowden described this value as “the very tip of the iceberg”, since the full extent of the crisis will not be revealed for at least 20 years, until people reach retirement and realise their retirement savings have been stolen.

“I honestly feel that we haven't even scratched the surface,” she said.

In August, the government announced new rules aimed to prevent fraud in pensions, which include tougher action to help prevent the transfer of money from legitimate pension schemes into fraudulent ones.

The new legislation, which will be introduced when parliamentary time allows, also includes a ban on cold-callers who try to scam people out of their pension savings, which will comprise emails and texts.

However it is now expected this legislation won't come into force until 2019.

Kate Smith, head of pensions at Aegon, said any delay in introducing measures to protect savers increases the risk for thousands of peoples’ pensions.

"In the time we’ve waited for the government to turn words into actions there’s been a rapid acceleration in pension scams aimed at the over 55s.

"This needs to be urgently addressed to protect people’s hard-earned pension savings.  

“The promise of greater powers for pension schemes and providers to stop suspicious pension transfers can’t be allowed to fall by the wayside.

The pension industry is doing all it can, within the current rules, to protect people’s pensions from scammers, but more powers are needed.

"The combination of the pension cold-call ban and powers to block ‘red-flag’ transfers, once delivered, should go a long way to stop these types of scams in their tracks.

“This is an area the Work and Pensions Committee is looking into as part of its inquiry into the Pension Freedoms.

We hope the Committee will put pressure on the Government to reprioritise legislation and find parliamentary time and avoid it becoming another casualty of Brexit.”