According to complaints filed with Action Fraud UK, more than £30 million was reportedly lost to pension scammers since 2017. The Pensions Regulator (TPR) says the figure is likely to be much higher as savers often fail to spot the signs of a scam and may not know how much is in their pots.
TPR has now launched a pledge initiative, asking pension providers, trustees and administrators to pledge that they will take all possible action to reduce and protect scheme members from scams and to follow the principles of the Pension Scams Industry Group (PSIG) Code of Good Practice.
The view of the chairperson of the PSIG is that the pledge initiative seeks to make the industry more accountable for pension scams and that it encourages confidence in implementing the practices set out in the PSIG Code, which will lead to greater protection for members.
Making the pledge
Those that make the pledge to combat pension scams will agree to:
- Regularly warn members of the risk of scams
- Encourage members requesting cash drawdown to contact The Pensions Advisory Service for free, impartial guidance
- Learn the warning signs of a scam and best practice for transfers by completing the scams module in TPR's trustee toolkit
- Take appropriate due diligence measures and document pension transfer procedures
- Clearly communicate concerns to members if they insist on high-risk transfers being paid
- Report concerns about a scam to the authorities and communicate this to the scheme member
To help make the pledge, pledgers should access the trustee toolkit scams module on TPR's website. Once processes are in place to meet the six pledge steps, pledgers can self-certify that they have taken action and that they abide by the six pledge principles.
The government's view
The minister for pensions and financial inclusion, Guy Opperman, has also backed the pledge initiative. Mr Opperman states that the initiative is an opportunity to give relevant industry leaders a chance to step up ahead of the legislative protections outlined in the Pension Schemes Bill 2020.
Pension providers, trustees and administrators have a vital role in combating scams. Making a pledge will demonstrate their intent to protect their members and prevent them from losing, what can sometimes be, a lifetime of savings. Failing to make the pledge could make trustees, providers and administrators look out of step with TPR's expectations and the PSIG Code.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.