Pension scammers make eight calls every second to try and trick retirement savers into transferring around £100 million a year into bogus schemes.
The scale of pension fraud in the UK was revealed in a new government consultation looking at new proposals to stop the scammers.
The government is planning a three-pronged attack led by The Pensions Regulator (TPR).
First is the much-publicised ban on cold-calling to promote pension transfers flagged by Chancellor Philip Hammond in his recent Autumn Statement 2016.
The ban will be linked with new rules limiting the right to transfer pension funds into some occupational schemes and measures to make opening a small self-administered pension (SASS) much harder for fraudsters.
Millions of victims
The proposals follow the release of some statistics highlighting the scale of pension scams.
The Money Advice Service suggests scammers make 250 million cold calls every year, with consumer watchdog Citizens Advice reckoning almost 11 million retirement savers picking up the phone to them an average 23 times a year.
Industry figures believe scammers are behind 10% of 30,000 pension transfers last year involving £1 billion.
Victims also reported losing £19 million from their savings last year – double the figure for the year before but much less than the true figure because so many scams go unreported.
“Pension investments are long-term, so many individuals may not recognise that they have been the victim of a pension scam until they seek to access their savings,” says the consultation report.
Scam tactics
“There are also concerns that some suspected scams are underreported to the police, or other law enforcement agencies. People may also be dissuaded from reporting pension scams, because they don’t want to acknowledge that an investment may be a scam, because they are embarrassed, or because they are worried about facing a tax charge for unauthorised pension access.”
The report explains that the tactics scammers employ to try to access pension savings include:
- Cold calling and high pressure sales
- Failing to explain the tax consequences of accessing pension savings before the age of 55
- Promising unrealistic high investment returns
- Failing to explain investment risks
- Suggesting risky overseas investments that offer no compensation if the transaction turns sour
The consultation closes on Monday, February 13, 2017.
