The government has confirmed new measures to protect private pension savers from being conned.
To tackle scammers, only active companies who produce regular, up-to-date accounts can now register pension schemes. Limiting transfers of pension pots from one occupational scheme to another will mean trustees must check their receiving scheme is regulated by the Financial Conduct Authority (FCA), has an active employment link with the individual, or has an authorised master trust.
Government figures show that almost £5 million was obtained by pension scammers in the first five months of 2017, bringing the estimated total since April 2014 to £43 million.
Parliamentary under-secretary for pensions and financial inclusion Guy Opperman said the measures should help protect private savers. “Today’s figures highlight the extent to which people’s savings are being targeted and stolen through elaborate hoaxes – leaving them with little opportunity to build up their savings again,” he said. “That is why we are introducing tough new measures for those who scam.
“If people have saved for a private pension we want to protect them. This is the biggest life saving that individuals normally make over many years of hard work. By tackling these scammers people should know that cold calling, apart from in exceptional circumstances, is banned.”
The measures will include a ban on all cold contact in relation to pensions, including emails and text messages.
Nathan Long, senior pensions analyst at Hargreaves Lansdown, said that while this will not stop scammers from operating it may help to make people more aware of their methods. “The government’s attack on scammers limits the options for scammers to get their hands on hard-earned pension savings,” he said. “Clamping down on calls, texts and emails won’t stop the scammers, but it sends a loud and clear message to be on your guard if you are contacted out of the blue. The golden rule with pension planning is that if something appears too good to be true it almost certainly is.
“Making pension schemes harder to set up and ensuring transfers only proceed to appropriately regulated schemes will help to blunt the damage scammers can inflict, but pension savers must remain vigilant.”
He told HR magazine that HR teams have a "crucial role" in protecting employees from scams. “Importantly these changes do not remove the risk of scams," he said. "HR teams have a crucial role in raising scam awareness as employees generally place a huge amount of trust in their employer.
"People only retire once and many are not confident in making financial decisions, so it can be an unsettling time. Scammers are often successful because offers that are ‘too good to be true’ appear irresistible. HR teams that help raise confidence and financial know-how through workplace financial education initiatives can help staff to spot these scams and steer well clear.”
