Pension fraud resulted in a record loss of £8.6m in March, a whopping 1,000% increase from the previous month. The shocking figure – reported by 24 victims – came just weeks after the Government put a halt on plans to help stop scams, particularly targeting the most vulnerable. Stuart Price, Partner and Actuary at Cardiff-based Quantum Advisory, says the decision not to go ahead with plans to prevent cold calling, place restrictions of pension transfers and make it much harder to set up fraudulent schemes is due to the snap General Election but should be a top priority for the next Government.
Stuart says: “To jump from a £779,000 loss in pension savings to more than £8million in one month is shocking. The fact that the Government has been reviewing the situation for some time and have chosen to do nothing is disappointing, although with a General Election fast approaching, it’s understandable that they have other priorities right now. As soon as a political party is elected, they need to put pension scam prevention high on their agenda.
“Normally a fraudster will target someone with a call or text out of the blue. With an estimated 250 million cold calls each year, the first thing the Government needs to implement is a blanket ban on cold calling. This would send out a clear message both to the public, that no legitimate organisation will cold call about pensions, and to the fraudsters, that it will cost them big if they breach the ban – up to £500,000 to be exact. The Government outlined what would come under the ban including offers of a ‘free pensions review’ and incentives to release pension funds early.
“The next thing the Government has suggested it will review is the restrictions on pension transfers. Currently it is difficult to block a transfer even when it is suspected that an individual may be transferring to a fraudulent scheme, because everyone has a statutory right to transfer. By putting certain guidelines in place, transfers can be refused if they don’t adhere to them and aren’t genuine.
“The Government can cut the fraudsters off before they’ve begun by making it more difficult to establish fraudulent pension schemes. Currently, these criminals will likely set up a small tax-registered scheme using a dormant or shell company as the sponsoring employer. Under the suggested proposals, only actively trading companies will be able to set up schemes.”
So what can you do to ensure you don’t get sucked in by a scam scheme?
Stuart continues: “If something sounds too good to be true, it probably is! Use your common sense, and always be overly cautious when someone that you’re not expecting, calls you. If they mention ‘overseas investment deals’ it’s probably best to steer clear as this is a common type of scam where your money is more at risk. If the caller says they are a financial advisor, check it out. The Financial Conduct Authority (FCA) has an approved register which lists all their trustworthy advisors. While you’re there, it would be worth having a look at the FCA’s list of well-known scams so you’re clued up if someone is trying to dupe you. Even if you think a deal is genuine and decide to go ahead, take your time and don’t rush into anything. Do all your research and read the guidance from the Pensions Regulator, Pensions Advisory Service or Pension Wise and don’t let pressure get to you. If it’s genuine, the advisor will wait.
Established in 2000, Quantum Advisory provides pension and employee benefits services to employers, scheme trustees and members from offices in Cardiff, Bristol, Amersham, Birmingham and London.