PSIG calls on trustees to review procedures amid rise in scammers

Pension scam attempts are on the rise, research shows. XPS found that pension scam red flags jumped to 34 per cent in June 2019, almost tripling from 13 per cent in June 2018.

PSIG released an updated version of its Code of Good Practice on Tuesday in an effort to combat “cunning” and innovative scammers.

Margaret Snowdon OBE, PSIG chair, said: “The human cost of pension scams is huge, so we must all do our utmost to prevent them. We therefore urge trustees and providers to review and adapt their due diligence processes to reflect this updated code.”

Common tactics for scammers include persuading individuals to transfer funds out of their pension scheme, often into investment opportunities or other schemes, by providing misleading information about tax charges and extortionate fees.

We urge trustees and providers to review and adapt their due diligence processes to reflect this updated code

Margaret Snowdon OBE, PSIG

Repeatedly, scammers claim they are helping pensioners take advantage of a fabricated pensions “loophole”.

Ms Snowdon said that, ultimately, further government legislation was necessary to stamp out pension scams, but PSIG’s code offered trustees a solid guide in the meantime.

“It will take the introduction of legislation to truly end the growing problem of pension scams, but in the meantime, our voluntary code provides essential guidance and tools to help trustees and providers identify and protect their members and themselves from suspicious activity,” she said.

Opperman ups anti-scammer rhetoric

Pensions minister Guy Opperman, who wrote the guide’s foreword, reasserted his dedication to stopping scammers. “Pension scams are callous crimes that rob people who have done the right thing and saved for their future and the retirement they deserve. I’m determined to stamp them out,” he said.

Mr Opperman commended PSIG’s work, calling it “essential reading” for everyone in the pensions industry.

We need to do more, and this new code will help pension trustees keep pace with this evolving threat and protect people from these wolves in sheep’s clothing

Guy Opperman, Pensions Minister

But the minister conceded the government could do more to banish scammers for good. “We need to do more, and this new code will help pension trustees keep pace with this evolving threat and protect people from these wolves in sheep’s clothing.”

He outlined that following the roll-out of the master trust authorisation regime this year, the Department for Work and Pensions plans to legislation to prevent the transfer of money from occupational pension schemes into fraudulent ones.

The Pensions Regulator’s executive director for frontline regulation, Nicola Parish, also welcomed the new guide. “The updated code will allow providers to more easily understand how they can help to prevent savers losing their funds to criminals,” she said.

The code of good practice was first published in 2015. It was updated to version 2.0 in June 2018, with version 2.1 published on Tuesday.

The updated code reflects the changing environment of tackling scams, such as the government’s cold-calling ban of January this year, and the revamped Money and Pensions Service (formerly the Single Financial Guidance Body) which launched in April this year.

Scam activity increases

XPS said that, in the year to May 31 2019, its scam identification team handled 969 member transfer cases, representing transfer values of £214m.

Wayne Segers, principal at XPS Pensions Group, said: “Over the last year we have seen a big increase in the number of warning signs being identified for potential scam activity on pension transfers.”

He continued: “Fortunately not all turn out to be scams, but it is good to see an increased understanding of the warning signs.”

Mr Segers urged pension schemes to help members better understand their pension entitlements and transfer fees.