The government confirmed on 20 November the new measures which its says will protect private pension savers from the threat of scammers.
The measures, which will be enforced by the Information Commissioner’s Office (ICO), include:
- A ban on cold calling in relation to pensions, including emails and text messages;
- A tightening of HM Revenue & Customs rules to stop scammers opening fraudulent pension schemes; and,
- Tougher actions to help prevent the transfer of money from occupational pension schemes into fraudulent ones.
The government also announced it would tackle scammers by ensuring that only active companies, which produce regular, up-to-date accounts, can register pension schemes.
It says limiting transfers of pension pots from one occupational scheme to another will mean trustees must check their receiving scheme is regulated by the Financial Conduct Authority, or has an active employment link with the individual, or is an authorised master trust.
Millions of calls
The announcement follows fresh figures revealed by minister for pensions and financial inclusion, Guy Opperman, in a letter to Labour MP Frank Field, who is head of the government committee overseeing the pensions freedoms inquiry.
In the letter, Opperman said, according to Citizens’ Advice data, as many as 10.9 million people a year are cold-called about their pension.
“They also found that, in 2013, 97% of their cases involving pensions liberation scams stemmed from a cold-call. As such, introducing and properly enforcing a ban on this activity will have significant benefits for consumers,” Opperman wrote.
“The government is currently finalising the details of a policy to ban pensions cold-calling, which will protect consumers from fraudsters, whilst ensuring that legitimate businesses are unaffected by the ban,” he said.
In addition to Opperman’s letter, the government released figures on 20 November showing that almost £5m ($6.6m, €5.6m) was obtained by pension scammers in the first five months of 2017.
The data further shows that £43m has been unlawfully obtained by scammers since April 2014.
Those targeted have lost an average of nearly £15,000, “as scammers try to encourage savers to part with their money with false promises of low-risk, high-return investment opportunities”.
“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. That is why we are introducing tough new measures for those who scam,” Opperman said.
No date set
Despite the tough talk by Opperman, no specific date has been set as to when the new measures will come into force.
On 10 November, the government said it would bring forward draft legislation for scrutiny to ban the practice in early 2018.
At the time, James Walsh of the Pensions and Lifetime Savings Association (PLSA) said, while the announcement was a step in the right direction, “we are still a long way from a cold calling ban actually taking effect”.
The announcement of tougher measures to protect people from falling victim to pensions scams comes in the wake of the “pension freedoms” that came into force in April 2015.
These freedoms enabled people to access their pension pots more easily then they had been able to previously.