New rules to protect pension savers from scams
Up until now pension schemes couldn’t refuse to carry out a requested transfer where the member was deemed to have a statutory right to do so.
But under the new regulations where a pension scheme has concerns, members can be referred to the Money and Pension Service for guidance. If there are clear red flags the scheme can refuse the transfer.
Fraudsters frequently offer ‘too good to be true’ incentives such as free pension reviews, early access to pension cash, or other time-limited offers. Lured in by these bogus offers, victims are then tricked into transferring their savings into a scam scheme and defrauded out of their savings.
Where there are tell-tale signs of fraud or methods frequently used by scammers, trustees and scheme managers will be able to prevent a transfer request – giving it a ‘red flag’.
In other circumstances where fraud is suspected, an ‘amber flag’ will pause a transfer until the scheme member can prove they have taken scam specific guidance from the Money and Pensions Service.
The government is working closely with regulators, the Pension Scams Industry Group (PSIG) and enforcement agencies to protect pensioners and raise awareness of the dangers presented by unscrupulous fraudsters.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Scammers rob people of their hard-earned retirement savings and for too long schemes have been powerless to stop them. These measures are a welcome step forward in protecting scheme members by giving schemes the power to stop transfers or refer members for guidance if they have any suspicions.”
The new regulations come into force on Tuesday 30 November. The government has committed to reviewing the new rules within 18 months to ensure they remain as effective as possible in targeting the evolving methods used by scammers.