The government has confirmed it will introduce new measures to protect private pension savers from the threat of pension scammers, including a ban on calls, emails and text messages.
The measures will include a ban on all cold calling in relation to pensions, a tightening of HMRC rules to stop scammers opening fraudulent pension schemes, and tougher actions to help prevent the transfer of money from occupational pension schemes to fraudulent ones.
Under the new rules trustees will have to check their receiving scheme is regulated by the Financial Conduct Authority (FCA), has an active employment link with the member or is an authorised master trust.
Under current legislation, transfers can be blocked where trustees can establish the receiving scheme is not an occupational pension scheme. If however trustees or managers can’t establish an employment or earnings link between the person and their new pension scheme they cannot rely on the absence of such earnings alone to refuse the transfer.
The ban will be enforced by the Information Commissioner’s Office (ICO). There is no set date for its enforcement, but a government spokesperson told Retirement Planner’s sister publication Professional Adviser the legislation would go through the parliamentary process as soon as possible.
Figures from the government show almost £5m was obtained by pension scammers in the first five months of 2017.
It is estimated that £43m has been unlawfully obtained by scammers since April 2014, with those targeted having lost an average of almost £15,000 each.
Minister for pensions and financial inclusion Guy Opperman said: “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. 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 lifesaving that individuals normally make over many years of hard work. By tackling these scammers, people should know that cold calling, apart from exceptional circumstances, is banned.”
Public protected ‘at last’
AJ Bell senior analyst Tom Selby felt confident about the proposed measures.
“The measures announced by the government should put a severe dent in the business models used by these fraudsters, giving savers more confidence their valuable pensions will be safe from criminals,” he said.
“The fact emails and text messages will also be covered by the ban means savers can be absolutely certain that if someone they don’t know contacts them out of the blue about their pension, they simply should not engage with them. That means don’t email, don’t text back and hang up the phone.”
Similarly, former pensions minister Ros Altmann said: “I’m so delighted to see the government seems to be taking the issue of protecting the public from pension scams more seriously at last.
“Banning cold calling and tightening up on transfers to fraudulent schemes will both help protect the public and there is widespread support for these measures. Having campaigned for so long on this issue, I am really pleased at this news.”
It all began with an IFA
It was Red Circle Financial Planning chartered IFA Darren Cooke who started a petition last year that called for “cold calling by phone or email for investment or pensions to be made illegal”.
The petition quickly received backing from pension providers and a consultation on how to prevent pension scams was outlined in the following Autumn Statement.
Last month, Altmann asked for the ban to be included in the upcoming Financial Guidance and Claims bill that will see the three guidance bodies merged into one.
However Altmann’s request was rejected, with DWP representative Baroness Buscombe saying the government planned to publish a consultation “shortly” that looked at ways to tackle pension scams, including cold calling.