A crackdown on pension scams has been outlined by the Government, as figures show fraudsters tricked savers out of nearly £5 million collectively in the first five months of 2017.
Actions include a ban on all cold calling in relation to pensions, including emails and texts; a tightening of rules to stop scammers opening fraudulent pension schemes; and tougher action to halt the transfer of money from occupational pension schemes into fraudulent ones.
The cold calling ban will be enforced by the Information Commissioner’s Office (ICO).
There will be two exemptions from the proposed ban to ensure legitimate businesses are not affected – calls where consumers have expressly requested information from a firm and those where an existing client relationship exists.
The Government is also tackling scammers by ensuring that only active companies, which produce regular, up-to-date accounts, can register pension schemes.
Limiting transfers of pension pots from one occupational scheme to another will mean trustees must check their receiving scheme is regulated by the Financial Conduct Authority (FCA), or has an active employment link with the individual, or is an authorised master trust.
Victims of pension scams stand to lose nearly £15,000 on average, as fraudsters try to encourage savers to part with their money with false promises of low-risk, high-return investment opportunities.
The pension freedoms give people a wider range of options as to how they use their savings, and some scammers may see these savers as a particular target. The Government-backed Pension Wise service gives guidance to people about their options.
The Government said new figures show nearly £5 million was obtained by scammers targeting private pensions in the first five months of 2017. It is estimated that £43 million has been unlawfully obtained since April 2014.
Minister for Pensions and Financial Inclusion Guy Opperman said: “Today’s figures highlight the extent to which people’s savings are being targeted and stolen through elaborate hoaxes – leaving them with little opportunity to build up their savings again. That is why we are introducing tough new measures for those who scam.
“If people have saved for a private pension, we want to protect them. This is the biggest lifesaving that individuals normally make over many years of hard work.
“By tackling these scammers, people should know that cold calling, apart from exceptional circumstances, is banned.”
In July 2015 the Government set up a taskforce to monitor trends, share intelligence on emerging threats, and help co-ordinate action to tackle scams.
Anyone who thinks they have been scammed should contact Action Fraud and their pension provider.
Economic Secretary to the Treasury Stephen Barclay said: “It’s utterly unacceptable that people who have worked all their lives to build up a pension pot should be subject to scams which may leave them out of pocket.
“Pensions are often the most valuable asset a person has upon reaching retirement – and that’s why we are determined to crack down on scammers and protect our hardworking savers.”
Gareth Shaw, a money expert at consumer group Which?, said: “Pension scams are costing retirees millions, so this action must lead to a crackdown on criminals stealing people’s hard-earned savings.
“As fraudsters look for new ways to target even the savviest people, the regulator will need to make sure that these new protections are enforced to safeguard people’s money.”
Former pensions minister Baroness Altmann said: “No reputable company should need to contact people out of the blue – they can find better ways to generate business.
“A ban would send a strong signal to the public that if someone contacts them out of the blue to discuss their pension, they should just hang up. If they receive unsolicited texts or emails, just delete them.”
Citizens Advice research has previously found that as many as 10.9 million people received unsolicited calls, emails and texts about their pensions in 2016 alone.
Gillian Guy, chief executive of Citizens Advice, said: “Banning unsolicited calls – a move Citizens Advice has been calling for – will make it much easier for people to spot a pension scam, and should put fraudsters off making contact out of the blue in the first place.”
Tom Selby, a senior analyst at AJ Bell, said: “Policymakers should monitor the effectiveness of these measures closely and consider further changes if savers continue to be pick-pocketed by fraudsters.”
He said fraudsters will seek to exploit any potential loopholes in the rules, adding: “But the message this intervention sends to savers is hugely valuable and should go some way to reducing the number of people who get conned out of their life savings.”
Lesley Titcomb, chief executive of the Pensions Regulator, said the plans “will strike a significant blow to pension scammers,” adding: “We are working closely with Government, enforcement agencies and key financial service bodies to bring scammers to justice and, through our Scorpion campaign, to help the public protect themselves from scams.”
Sir Steve Webb, director of policy at Royal London, said: “Whilst this announcement is welcome, it is vital this ban is implemented as a matter of urgency.
“Savers are being ripped off every day, and the official figures greatly understate the amount that is being lost.
“We cannot afford to wait months or even years before it is illegal to phone someone up out of the blue in this way, as a cold call is often the first step to a scam.”