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Scamproof your savings

Ref: PN15-15
Monday 16 March 2015

Pension savers are being urged to ‘scamproof their savings’ as part of a campaign launched today by The Pensions Regulator ahead of forthcoming changes to the law.

Go to our pension scams campaign page.

To date, under-55s have been the primary target for scammers promising to be able to release people’s pensions as pension loans or upfront cash. But, from April 2015, new flexibilities will give people aged 55 and over more freedom over how they access their pension pot.

People approaching 55 may be contacted by scammers seeking to exploit people’s interest in the change in law, for example by enticing them to move their cash into bogus, unregulated investments or other forms of scams.

The Pensions Regulator has refreshed its scorpion campaign to alert retirement savers and pension scheme trustees to the risks, produced in partnership with regulators and Government partners to tackle scams. It offers advice for savers on how to spot a scam, and what to do if they have been contacted by a suspect organisation.

The scorpion campaign also provides guidance for pension scheme trustees, including a check list of scam hallmarks, and signposts to a new code of good practice that sets out due diligence processes to combat pension scams. It calls on trustees to encourage members to contact Pension Wise, the new Government service aimed at helping those approaching 55 to understand their options.

Minister for Pensions Steve Webb said:

“You can spend years saving into a pension only to find yourself tricked out of your money in the blink of an eye by these unscrupulous crooks.

“We are taking tough action along with our partners to tackle this scourge, but people must be vigilant. To get genuine guidance on your options, people should contact the free and impartial Pension Wise service.

“If you are cold called by someone offering you a free pensions review, it’s probably a scam so put the phone down.”

The Pensions Regulator’s Chief Executive Lesley Titcomb said:

“Scammers will try to flatter, tempt and pressure people into transferring pension funds into an investment with guaranteed returns, most of which will be bogus. Consumers can help to scamproof their savings by using our new scorpion campaign material, talking to the Government’s new Pension Wise service or consulting an FCA-regulated financial adviser before making an irreversible decision.

“The people behind pension scams are often agile, sophisticated and organised. Whatever the law is, they will seek to exploit it – so we expect the scams we see to continue to evolve in light of the new flexibilities available. Arm yourself with the right information and never make a hasty decision. Once the transfer has gone through, it’s too late.”

Head of Action Fraud, Pauline Smith said:

“Fraudsters are continually looking for new ways to make criminal capital and the new pension reforms could provide them with another avenue to exploit in the coming months. First and foremost, if you’re ever cold called by someone offering an investment opportunity the best course of action is to play it safe and put the phone down immediately.

“If you need information about the pension reforms, seek guidance and ensure you check all of the facts before you make an irreversible decision. A lifetime’s savings can be lost in just moments. If you do become a victim please ensure that you report it to Action Fraud”.

Michelle Cracknell, Chief Executive of The Pensions Advisory Service said:

“A good pension could change people’s lives; it’s a valuable asset that many forget about until later life. Unfortunately, like anything valuable, pensions are at serious risk of scams. We have calls from many people who have been approached by cold callers offering pensions reviews or propositions of unrealistic or false opportunities.

“We believe that it is really important that we raise consumer awareness of how people can properly protect their pension savings and make the most of them. By taking certain precautions, pension savers can feel confident that they are safeguarding their financial future.”

The ability to access their pension pot flexibly at 55, subject to their marginal tax rate, may result in some individuals being less tempted by scams as they can transfer funds into legitimate drawdown products.

In addition to using the Pension Wise service, pension savers are advised that if they are approached, they should check that their adviser is registered with the Financial Conduct Authority (FCA). The FCA’s ‘Scamsmart’ list also names the investment schemes that are known scams. If people are concerned they can contact The Pensions Advisory Service on 0300 123 1047 or if they have already accepted an offer, they can report it to Action Fraud or call 0300 123 2040.

Editor's notes

  1. The new guidance service Pension Wise is aimed at helping those approaching 55 to understand their options. Citizen’s Advice Bureau and The Pensions Advisory Service will provide the expertise required to help people consider their options and make good choices. New requirements have been put in place requiring providers to ask people accessing their pension savings questions based on how they want to access their savings to assess risk. The Pensions Regulator has issued guidance aimed at encouraging trustees to make members aware of the risks in making certain choices. It is now a criminal offence for scammers to impersonate the official guidance service.
  2. The regulator is working with a taskforce of Government, regulators, financial services bodies and criminal justice agencies (Project Bloom) to disrupt and prevent scams. We continue to work with HMRC, FCA, NCA, Action Fraud, SFO and others so that the right agency intervenes where appropriate.
  3. Follow information via @actionfrauduk on Twitter and on the Action Fraud page on Facebook.
  4. The Pensions Regulator is the regulator of work-based pension schemes in the UK. We have objectives to: protect members’ benefits; reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the employer’s plans for sustainable growth (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

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