Pension scammers are likely to rip-off at least £10 billion from retirement savers – and many won’t know they are a victim of fraud until they try to withdraw cash from their funds.
Officials expect more than 100,000 savers have fallen prey to the scammers who have sucked dry the hard-earned pensions of tens of thousands of savers.
Regulators lay the blame for the ease of access to pension funds at the door of Tony Blair’s Labour government.
The former Prime Minister sanctioned offering pension administrators instant online approval and dropped the old system that checked out the trustees before offering their schemes registered status.
The move opened the floodgates for crooks who marketed their schemes to unsuspecting savers as ‘HMRC approved’ because they were on the list of registered pension schemes.
Registered status allowed the scammers to offer pension tax breaks sanctioned by HMRC while offering savers the look of official respectability.
The scammers made their money by persuading savers to switch their retirement cash into their scheme, taking big fees to complete the transaction and earning commission from placing the funds into dodgy high-risk investments, like offshore hotel resorts, storage pods and plantations.
Sometimes, the money was moved from one investment to another to generate commissions until the fund was drained of cash.
And because registration was not proof of a legitimate pension, HMRC has chased many savers with massive tax bills for putting money into an unauthorised scheme.
Tip of the iceberg
Margaret Snowdon, of the Pensions Scams Industry Group, said: “What we have seen so far is likely the very tip of the iceberg. From talking to insurers, administrators and trustees, the full figure for all such scams could be £10 billion.”
Although thousands of pension savers have lost money to scams, many may not realise because they do not check their funds regularly.
Andy Agathangelou, of the Transparency Task Force, which campaigns for more openness from financial firms, said: “We are not just talking about dodgy characters. There was systematic, industrial-scale scamming.
“The changes to the registration system made pensions a paradise for crooks.”