Calls for authorisation regime to stop pension scammers

Calls for authorisation regime to stop pension scammers

Four fifths of savers believe there should be stricter rules and checks from providers and schemes to ensure that pension pots are secured, research has revealed.

According to a survey from industry body the Pensions and Lifetime Savings Association (PLSA) – which polled more than 2,000 UK adults - only 28 per cent of respondents felt these checks are unnecessary because people should be able to access their money easily as and when they want.

Pension scams have been on the radar of the government, which announced last year the introduction of a ban on cold-callers who try to scam people out of their pension savings that will include emails and texts.

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The government said last week that it is now working to speed up the introduction of this ban.

The money taken by fraudsters in these scams is currently unknown, with The Pensions Regulator admitting last week that it may never be able to identify the scale of pension scams.

Margaret Snowdon, chair of the PASA and of the Pension Liberation Group, estimated that pension savers have lost more than £1bn to scams.

As part of the research the industry body also tested savers perception of what is a pension scam, with 29 per cent missing the most obvious fraud situations.

The majority of respondents (65 per cent) were able to identify a situation "when they were contacted by someone who is trying to get you to transfer your pension to an investment or scheme which seems too good to be true" as a scam, but were less sure about other scenarios.

Less than half (48 per cent) of savers thought that "when you speak to an adviser who tells you to take actions which you find out are not in your best interest" could be a pension scam.

Only 43 per cent thought when you are advised to invest your pension fund into an investment that means you end up paying a huge tax bill that this could be a potential fraud.

The PLSA said these findings are concerning, given that one in six (17 per cent) of those with a pension say they have been contacted by a company, other than the one that provides their pension, to discuss making changes or transferring their pension.

One in 10 (11 per cent) have even been contacted multiple times.

According to James Walsh, policy lead for engagement, EU and regulation at the PLSA, the research shows that consumers struggle to identify pension scams and are keen to see stronger checks.

He said: "Pension scams come in all shapes and sizes as scammers become increasingly sophisticated.

"Whilst the government's ban on cold calling is welcome it is only part of the solution.

"There are other steps the government can also take to help protect people's hard-earned savings.

"The PLSA is calling on the government to make urgent progress towards introducing an authorisation regime for pension schemes. That will reassure people that they are only dealing with legitimate providers."