The Pensions Regulator has appealed for support from industry to protect savers from scammers, and has issuance guidance for trustees on how to report pension scams.
In a blog post published on June 15, TPR’s executive director of frontline regulation Nicola Parish said that it had found that “high fees and unsuitable advice were often linked to the increasing transfer requests to international self-invested personal pensions, which look to facilitate investment overseas but through a UK-registered Sipp”.
Those looking for these transfers often live overseas, with the transfer facilitated by intermediaries and advisers outside the UK, the regulator said.
Parish observed a decline in scams conducted via cold calling, following a ban on pensions cold calls in 2019.
However, retirement savings are becoming more exposed to a general increase in investment scams, she wrote. Savers may be persuaded to transfer their pot to another pension product, such as a Sipp, or invest cash withdrawn from their pension under freedom and choice rules introduced in 2015.
“We need industry’s help in ensuring pension savers are made aware of the potential risks from investment scammers,” Parish wrote.
TPR’s new guide - which follows new regulations introduced last November which allow trustees can pause or block pension transfers if they deem it necessary - encourages the reporting of potential scams when one of its red flags is raised when conducting a transfer, as well as when suspicions arise over potential amber flags.
Red flags include a member not having given evidence of receiving MoneyHelper guidance, requesting a transfer after unsolicited contact, or having been offered an incentive to carry out the transfer.
Amber flags, meanwhile, can include a lack of clarity over scheme charges, a scheme’s investment structure being complex or unorthodox, or a sharp rise in transfers involving the same scheme or adviser.
TPR warned that not every report of a potential scam leads to an investigation.
“All reports help to build a clearer picture and allow more disruption to fraudulent activity,” it said. “This makes the UK a more hostile place for fraudsters to operate in.”
Alex Janiaud is deputy editor at Pensions Expert