Greater powers needed to tackle growing problem of pension scams
Urgent and decisive action must be taken by the police, Government and pensions industry to stop scammers stealing people’s life savings, according to a new study published today. (Monday 7th September).
As the Coronavirus pandemic continues to cause a rise in pension fraud, research from workplace pension provider, The People’s Pension1, and policing think tank, the Police Foundation2 has found that from13 pension providers alone, almost a thousand customers with combined savings of £54 million were targeted by scammers last year.3
While fraud has always been a feature of pensions, following the announcement of pension freedoms in 2014 and a further relaxation of rules in 20154, there has been growth in different kinds of scam, with savers pension pots more vulnerable.
Although pension providers are currently able to flag potential fraudulent activity to customers, neither they nor The Pensions Regulator are able to stop transfers; a key reason why two thirds of the 938 customers, still transferred £31 million worth of funds despite the risk.
The People’s Pension and The Police Foundation are calling on the Government to give pension companies the power to trigger an urgent regulatory response to savers at risk of fraud, enable regulators to override the statutory right to transfer should a suspected scam be reported to them, and ensure victims of pension fraud are not hit with tax penalties as is currently the case.
Commenting, Phil Brown, director of policy at The People’s Pension, said:
“Pension savings make up a huge proportion of personal wealth in Britain, with around £2.5 trillion accessible to scammers. For those people who fall victim to fraud, it can be devastating; many people lose their life savings and are hit with the double whammy of still having to pay tax penalties. For some people, they’re forced to sell their homes, while others have sadly taken their own lives as a result.
“Currently, pension providers can flag a potential scam to a customer, but we can only stand by and watch if the individual chooses to proceed with a risky transfer that could result in them losing all their savings.
“We’re calling on the Government to provide trustees, pension providers and regulators with the powers to stop risky transfers and ensure victims of fraud aren’t hit with having to pay tax penalties on their lost savings.”
The report also calls for a broader definition of pension fraud to ensure crime data provides an accurate picture of the issue with a central database set up to ensure a more systematic collection and analysis of intelligence, and recommends police investigators are supported by specialist fraud victim support services such as that provided by the National Economic Crime Victim Care Unit, to help manage, assess and support vulnerable victims of fraud, and facilitate engagement with the criminal investigation.
Commenting, Rick Muir, Director of the Police Foundation said:
“We can’t arrest our way out of pension and investment fraud and that’s why efforts at the front end to prevent scams are so important.
“Nonetheless, in terms of financial losses and overall wellbeing pension scams are among the most harmful types of fraud and it is therefore vital that they are taken seriously by law enforcement.”
Notes to editor:
- The People’s Pension is a leading, not-for-profit, auto-enrolment pension scheme, representing five million pension savers from 90,000 employers and has £10 billion assets under management.
- The Police Foundation is the only independent think tank focused exclusively on improving policing and developing knowledge and understanding of policing and crime reduction. Its mission is to generate evidence and develop ideas which deliver better policing and a safer society.
- From 13 pension providers alone, 938 customers with combined savings of £54 million were targeted by scammers last year. A full copy of the report can be found by found here.
- Pension Freedom and Choice were introduced in 2015, click link here.