Pension savers lack confidence on scams

That’s according to a survey by financial adviser Portal Financial, which assessed 1,000 people aged over 55 across the UK.

As a result those individuals are vulnerable to investment scams with terms attached that are more attractive than any genuine scheme.

But of far greater concern is that more than a fifth of respondents did not know where they could access accurate financial advice on the pension reforms.

Source: Portal Financial

Without such information it is impossible for customers to exercise their rights effectively.

The intention of the reforms was to promote freedom and choice for consumers, but the freedom to be defrauded is of no use to anyone.

Source: Portal Financial

The threat of a rise in investment scams was noted well ahead of April’s reforms. It was clear that retirees suddenly granted access to big pots of cash would create an irresistible new stream of potential targets for fraudsters.

And the figures bear this out.

The latest data from City of London Police show that losses from pension liberation fraud were more than three times greater in May than April.

One data point is not a trend, but the stark rise has prompted discussion of how freedom and choice can be balanced with protecting vulnerable investors.

The Pensions Regulator’s Scams Awareness Month campaign in July included a call to action for trustees to inform their members about the Pension Wise service.

Well-informed customers are able to protect themselves from scams, which is not only good for them, but also protects the pensions industry from reputational damage caused by criminal acts.

The government’s freedom and choice agenda will not be successful without robust safeguards and advice to support customer decision-making.

While the Financial Advice Market Review will seek to make advice easier to access, trustees are in a position to act immediately.

Vigilance against suspicious transfers and member education will result in a fairer and more secure marketplace.