There have long been calls for a ban on pensions cold calling, with many retirees having lost their life savings to unscrupulous scammers. Happily, that kind of thing could be coming to an end, with the Government yesterday confirming that new measures are being put in place to protect private pension savers from such threats.
The new measures will include a complete ban on cold calling in relation to pensions – something that's already in place for the likes of mortgages – which will apply to all kinds of unsolicited contact, including emails and text messages.
However, the Government is going one step further to crack down on pension scammers at every touchpoint, with the measures also including tighter HMRC rules to stop scammers from opening fraudulent pension schemes in the first place, and tougher actions to prevent the transfer of savings from occupation pension schemes into fraudulent ones.
The rules mean that only active companies – those who produce up-to-date accounts – can register pension schemes, while the move to limit transfers between pension pots will mean that trustees will have to check that the receiving scheme is genuine, by determining that it's regulated by the FCA, has master trust status or has an active employment link with the individual.
Given how many people are falling victim to pension scams, this kind of intervention couldn't have come at a better time. Indeed, Government figures show that almost £5m was obtained by pension scammers in the first five months of the year – bringing the total since April 2014 to £43m – with those targeted having lost an average of almost £15,000 each.
"Today's figures highlight the extent to which people's savings are being targeted and stolen through elaborate hoaxes – leaving them with little opportunity to build up their savings again," said Minister for Pensions and Financial Inclusion Guy Opperman. "That is why we are introducing tough new measures for those who scam."
Economic Secretary to the Treasury Stephen Barclay added that it's "utterly unacceptable that people who have worked all their lives to build up a pension pot should be subject to scams which may leave them out of pocket," particularly given that "pensions are often the most valuable asset a person has upon reaching retirement. That's why we are determined to crack down on scammers and protect our hardworking savers".
Cold-calling pension scams have been particularly prevalent since the onset of the pension freedoms – scammers know that retirees can access their cash how they see fit, and they were looking to access that cash by offering low-risk, high-return investment opportunities, stealing life savings in the process. It's hoped that the ban will mean this kind of scam is a thing of the past, and the announcement has understandably been welcomed by those in the industry.
However, as Old Mutual Wealth head of retirement policy Jon Greer points out, you'll still need to be on your guard. "Many cold callers today will already be operating illegal pension scams, [so] if they are already willing to break the law, a cold calling ban won't stop them," he said.
"The main benefit of this ban is really to raise public awareness and make sure they are suspicious of any cold calling activity. If you receive an unsolicited call offering a 'pension review' you should always hang up and instead discuss your options with a financial adviser that you know and trust."
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.