Call for new powers to foil pension scams
PENSION providers need new powers to prevent the elderly from transferring life savings to scammers, say experts.
Savers now enjoy greater freedoms around unlocking their pots and transfer them to other schemes.
But 938 customers with combined savings of £ 54million were potentially targeted by fraudsters in 2019, found research from pension scheme the People’s Pension and policing think tank the Police Foundation.
Nearly two- thirds of customers had insisted on the transfer going ahead, with £ 31million potentially lost, in the study of 13 pension providers.
Experts said The Pensions Regulator should be able to override a saver’s right to transfer their scheme if it is a scam. Currently, they cannot intervene.
It is proposed that they be given the authority to stop transfers. Pensioners who disagree with the intervention would be able to appeal to the Pensions Ombudsman.
Phil Brown, director of policy at the People’s Pension, said some scam victims end up being forced to sell their homes after losing their life savings. He said: “Pension savings make up a huge proportion of personal wealth in Britain, with around £ 2.5trillion 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 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 research also called for staff to be better trained to spot scams and for police to set up a central intelligence unit to build up information on scams.
Dr Rick Muir, Director of the Police Foundation, said: “We will not be able to 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.”