Between 2014 and 2017, £43 million has been reported as stolen from pensions. Since a lot of pension fraud goes undetected, the actual figure is likely to be a lot higher; some estimates suggest fraudsters could be behind up to £100 million of pension transfers in 2015-16 alone. While the figures may seem bad enough, they mask the personal gravity of the issue: vulnerable pensioners are losing their main source of financial support. The government has therefore committed to tighten rules for business owners to prevent pension fraud.
Trustees (who are the people who manage pension funds) must check that a pension scheme meets certain criteria – for instance, being regulated by the Financial Conduct Authority (FCA) – before the transfer can be made. Individuals must also either receive guidance, or expressly refuse it, before they can access their pension pot, providing some defence against pressure tactics by fraudsters. All of the above changes are expected to come into effect by June 2018.
Other rules targeting business owners include:
- To make it harder to set up fraudulent pension schemes in the first place, only active companies – those that produce regular up-to-date accounts – can set up pension schemes, making it tougher for fraudsters to set up a dummy company for the sole purpose of creating a fraudulent pension scheme.
- A related form of pension scam occurs when fraudulent businesses contact pension scam victims and offer to secure the victim compensation for a fee. The FCA has been empowered to be able to impose a cap on fees that can be charged by compensation firms.
- To increase the awareness of pension scams amongst vulnerable pensioners, targeted advertising of Pension Wise services is being pursued. Pension Wise is a public body that provides free, impartial advice on pensions.
These laws were part of the Financial Guidance and Claims Act passed in May 2018, and the regulations are now in effect. On this basis, we are marking this policy as ‘done’.
- Financial Guidance and Claims Act 2018 – Gov.uk
- Government commits to 2018 cold-calling ban – Pensions Expert
- Tough new measures to protect savers from pension scams – Gov.uk
- Protecting pensions against scams: priorities for the Financial Guidance and Claims Bill – Gov.uk
Related manifesto policies