PensionsJun 10 2019

Increase in pension scam alerts

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Increase in pension scam alerts
ByMaria Espadinha

XPS Pensions has seen a significant increase in the number of potential pension scams in the past year, the consultancy has warned.

Ben Fisher, consulting actuary at XPS, said the number of cases that included warning signs of pension transfer scam activity increased from 13 per cent in June 2018 to 34 per cent in June 2019.

He said: "Over the past year, we have seen a rise in potential cases of hidden fees in transfers and also in cases where members do not recognise the IFA recorded on their paperwork.

"Fortunately, not all turn out to be scams, however it does show there is an increase in warning signs."

Wayne Segers, head of transactions at XPS, noted that one of the red flag warnings identified by the firm’s scam identification team – present in 22 per cent of the cases analysed – was the members being unaware of the fees they would be paying in their new arrangements. 

He said: "After investigation, many cases are due to a lack of understanding of the fees associated with transfers, rather than scams. 

"Our focus continues to be supporting trustees and employers to help members understand their options."

On the other hand, XPS stated that cases of cold calling have halved compared to last year.

A ban on cold-calling, including emails and texts, was introduced in January this year, making such activity unlawful and subject to fines of up to £500,000.

Paul Gibson, managing director at Granite Financial Planning, said it was "a real shame that the potential numbers of scams remains so high".

He said: "The cold calling ban whilst a good first step was never going to stop the issue completely.

"More publicity and vigilance by providers is to be welcomed but in reality the crooks are never going to disappear completely.”

XPS Pensions' new data was published last week in advance of the Scam Awareness Fortnight, happening from today (June 10 to 21).

Promoted by Citizens Advice, this is a yearly campaign which aims to create a network of "confident, alert consumers" who know what to do when they see a scam. 

Victims of pension scams last year lost an average of £91,000 each to fraudsters. They reported receiving cold-calls, offers of free pension reviews, and promises that they would get high rates of return – all of which are warning signs of scams.

The Financial Conduct Authority and The Pensions Regulator launched a scam awareness campaign in August which targeted pension holders aged 45 to 65, the group identified by the regulators most at risk of pension scams, and featured television adverts highlighting the most common tactics adopted by fraudsters.