Former pensions minister Ros Altmann has called for pension transfers to be put on hold for six months, as fund values could be inaccurate due to the current market turmoil.
Baroness Altmann said it is currently impossible for pension scheme trustees to be sure of the underlying value of a pension funds.
She said: “Therefore, introducing measures to delay all pension transfers for up to six months would seem a sensible way of helping to stabilise pension schemes and allow time for a clearer picture to emerge.”
The Covid-19 outbreak was labelled a pandemic by the World Health Organization in the beginning of March, as more than 100 countries have registered cases.
Since the start of 2020 the FTSE 100 has fallen by 31 per cent, while the S&P 500 has dropped by 29 per cent over the same period.
Analysis by Hymans Robertson showed market turmoil added £100bn to the UK’s defined benefit deficit in a week.
Baroness Altmann said stopping transfers would also help avoid further scam losses.
“With so many people at home or out of work, there is a greater risk of cold-callers reaching more targets.”
There is also a “rising concern about ‘too-good-to-be-true’ fraudulent investment offers finding willing customers who will transfer their secure pension and lose their life savings,” she added.
According to Action Fraud, there were 105 reports of fraud relating to Covid-19 since the beginning of February, with total losses reaching £970,000.
There were 46 such reports between March 1 and March 13, but then they suddenly spiked, with 38 reports in the following four days.
Baroness Altmann also suggested that while transfers are put on hold, trustees should use the time to go back over past records and undertake data cleansing and reconciliation exercises, as “the vast majority of pension schemes have error-ridden data which they have not invested sufficient time to cleanse”.
Using the coming months to focus on data cleansing would have significant advantages, she noted, adding that accurate data will be essential for the pensions dashboard project.