To ask Her Majesty's Government, further to the report by Police Foundation and The People’s Pension Protecting People’s Pensions: Understanding and Preventing Scams, published on 7 September, what action they are taking to protect people from pension scams.
28 September 2020
The Government is committed to safeguarding consumer savings and we want individuals to better understand the choices they have and the risks that exist.
Since the introduction of the pension freedoms in 2015, we have made several legislative interventions to tackle scams. The Finance Act 2018 strengthened the HM Revenue & Customs process for registering pension schemes, thereby reducing the risk of fraudulent schemes being established. In 2019, HM Treasury introduced a ban on pension cold calling, to reduce the chance of individual’s being enticed into such schemes. We are now introducing a clause in the Pension Scheme Bill that allows legislation to set conditions on members’ statutory right to transfer, and thereby introduces two additional barriers to protect people. The clause sets examples of the conditions that must be applied to statutory transfers unless requests are to either a firm regulated and authorised by the Financial Conduct Authority or an authorised Master Trust. The legislation will require members to confirm they have obtained information or guidance of the associated risks of scams, and still want the transfer to go ahead.
We will also be bringing forward new information requirements from the age fifty to those with defined contribution pension savings, that will inform them in more simplified terms, about their retirement options and the availability of guidance to help with their decisions. We see accessing guidance as a natural part of the journey savers take, before making a decision relating to the pension freedoms. Following the recent trials, which showed a nudge to guidance during the application process is effective, we will be commencing section 19 of the Financial Guidance and Claims Act 2018, which amends the Pension Schemes Act 1993.
The Government has, and will, continue to work with industry and regulators to identify the circumstances that cause most concern (‘red flags’), so that we can determine how best to use legislation that ensures members at high risk are protected.
The Department Work and Pensions (DWP) continues to work with other Government Departments, regulators, enforcement agencies and the pensions industry to monitor the evolution of the methods scammers use and raise awareness of these through coordinated campaigns. The pre-COVID campaign, July – November 2019, resulted in over 222,000 visits to the ScamSmart website, to find out how to identify and report a scam.
DWP has also supported industry initiatives such as the Regulators and Money and Pension Service joint statement, to industry encouraging individuals not to make hasty decisions and endorsed equivalent initiatives by the Pension Protection Fund.
DWP has set out warning signs of scams on social media and made 18 posts referencing Pension Scams and ScamSmart in total across Twitter, Facebook and LinkedIn in the period March to September 2020.
We continue to monitor the situation closely and will take necessary action to protect savers from scams.