Members of public sector schemes are being targeted by pension scammers, with a high number of people opting to transfer out, the head of the Norfolk Pension Fund has warned.
Speaking at the Pensions and Lifetime Savings Association’s annual conference in Manchester yesterday (October 17), Nicola Mark said: “You would be astonished with the number of people that want to transfer out, and the reason they want to transfer out is because they want to have access to freedom and choices, to the money they are not able to [access] in the public-sector schemes.”
With some 92,000 scheme members, the Norfolk Pension Fund - part of the Local Government Pension Scheme (LGPS) - paid out £6.4m in individual transfers in 2018/19, according to its latest annual report.
Because the LGPS is fully funded, it is one of the few public sector defined benefit pension funds which allows its 5m members to transfer out.
Ms Mark welcomed provisions in the current Pension Schemes Bill which include additional rules to prevent scams, although she said it was not yet clear how they would apply to public pension schemes.
The proposed rules around pension transfers require trustees to check the receiving scheme is regulated by the Financial Conduct Authority, or has an active employment link with the individual, or is an authorised master trust.
The rules where originally announced in 2017 but the government stated it would legislate in this area following the roll-out of the master trust authorisation regime, which is set to complete this year.
Ms Mark said: “I hope some of it [the new rules] does apply to us because we genuinely have so many issues around the scams, and the potential cybercrime, and the amount of approaches individuals in public sector schemes are now getting – you can do this, you can do that, you will have access to this pot of money… It is all very serious.
“We have to sign off to say that we have seen the certificate that the person has had financial advice.
“But I know that administrators look at these and they thinking: what on earth are they doing transferring out of the scheme? But you can’t question it.”
The new rules for transfers are expected to prevent an outcome such as the one seen in the Royal London case from 2016, where a High Court judge ruled in favour of a clients’ right to transfer her pension into a new scheme despite her existing provider’s concerns about it.
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