Pension schemes are being urged to raise the alarm over scams following a long-term drop in reporting.
National fraud and cybercrime reporting centre, Action Fraud, has released data which shows a steady fall in pension scam reports from 1,788 in 2014 to 358 in 2020, constituting an almost 80 per cent reduction.
Although there has been a slight rise in reporting in 2021, the Pensions Regulator called on the industry to be on high alert for criminal or suspicious activity, following a pledge released in November aimed at protecting members from scams.
The 'Pledge to Combat Pension Scams’ asks signatories to warn members regularly about scams, promote guidance services, document their actions, and clearly communicate their concerns to both members and authorities.
It also requires schemes and professionals to familiarise themselves with best practice on scam detection and prevention, as set out in resources such as the regulator's trustee toolkit and the Pension Scams Industry Group's code.
At least £30m has been identified as lost to scams since 2017, and losses can range from under £1,000 to up to £500,000, according to Action Fraud.
However, the true amount is likely to be higher, since victims often do not realise they have been tricked until many years later, Action Fraud suggested.
There are also fears surrounding the possibility of scammers using the Covid-19 pandemic to their advantage to steal from savers.
Over 200 organisations have signed up to the TPR’s pledge, following changes the regulator has made to protect savers in light of Covid-19, including the introduction of new scams training for trustees in the toolkit and the ‘warning letter’ for those looking to transfer out of a defined benefit pension.
Nicola Parish, TPR's executive director of frontline regulation, said: “To fight the scourge of pension scams and keep up with scammers’ ever-changing tactics, we need a clear understanding of the size of the problem and good-quality intelligence.
“While we’ve seen no evidence of a significant increase in pension scams during Covid-19, we believe many across the industry, including trustees, pension providers and administrators, are not reporting suspected scams at a time when the pandemic could leave savers more vulnerable.”
Margaret Snowdon, chair of the Pensions Scams Industry Group, noted there were several reasons for under-reporting.
“Schemes may not report because they think it is a hassle, they are not certain something is a scam, or they are concerned the report won’t be dealt with, but reports to Action Fraud are fundamental if scammers are going to be caught out by law enforcement.”
Snowdon said if there is “better information on the scale of pension scams and the methods used, we are more likely to get the resources and attention we need to combat scams more effectively.
“The pensions industry must step up and improve reporting or it will make defeating scammers all the more difficult.”