New rules to stop pension rip- offs
A “RED FLAG” scheme to protect savers from scams designed to steal their pension pots will be proposed by the Government today.
Ministers are planning new regulations to warn people about transferring retirement savings into alternative schemes.
The move comes following concern that fraudsters are tricking vulnerable older people into handing over their life savings to bogus investment schemes.
Under the plan, pension trustees will be able to put a “red flag” alert on a suspect financial transfer before any money is moved.
The warning will tell the saver to seek independent advice before confirming that the transfer can go ahead.
A trustee is a person or firm who holds assets for the beneficiaries of the pension scheme.
Work and Pensions Secretary Therese Coffey will set out the proposal today during a Commons debate about the Government’s Pensions Schemes Bill.
She said: “For too long, callous crooks have been luring savers with get- rich- quick schemes and dodgy investments, only to walk off with someone’s hard- earned pension.
“While it is vital people have the freedom to do as they wish with their pension pots, I cannot stand by as unscrupulous scammers fleece them of financial security in later life.
“No one should lose the retirement they want because of scams, so it is only fair that they can plan for this knowing there are robust mechanisms in place to protect them.”
The proposal is part of the Bill, which includes a series of measures drafted to try to improve protection for consumers in the pensions industry.
It will mean that savers will be required to confirm, in certain circumstances, that they have received information or taken guidance about the risk of scams when moving their money.
They will be legally obliged to seek professional advice to ensure they understand the potential risks involved in any transfer.
Other measures in the Bill include new legal obligations to inform people aged over 50 about the choices they need to make ahead of their retirement.