Pensions: Fraud

(asked on 7th December 2020) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what steps she will take to protect consumers from proceeding with fraudulent online pension transfers.


Answered by
Guy Opperman Portrait
Guy Opperman
Parliamentary Under-Secretary (Department for Transport)
This question was answered on 10th December 2020

Government is committed to safeguarding the savings of consumers based in the UK and people living overseas with UK based savings. Although the majority of transfers are to safe destinations there are still fraudsters who try to entice individuals to transfer to schemes for the purposes of relieving them of their pension savings.

To help protect people from pension scams, clause 125 in the Pensions Schemes Bill 2020 will allow government to introduce measures to limit the statutory right to transfer. The clause achieves many things and reference is made to all the parliamentary responses on this topic for the details. However, in summary:

  1. it introduces in legislation provisions that require members to provide evidence of an employment link or, if transferring abroad, residency before a statutory transfer can take place; and

  1. it will remove the right to transfer if certain circumstances (red flags) are identified by the trustee or scheme administrator. For other prescribed circumstances people will be required to confirm they have received information or taken guidance about the risk of scams before a transfer can proceed. We are and will continue to work with industry and regulators to identify these circumstances. This means that trustees will have the power to refuse a transfer if the red flags occur or an individual has not taken guidance. The regulator will oversee the operation of these new requirements.

Regulators and trustees also have a broader role to play in scam prevention. The Pension Regulator, Financial Conduct Authority, and Money Advice and Pension Service issued information on 7 April pointing to the actions members should seek to take to safeguard against becoming victims of scams. Additional guidance was issued to trustees, and providers from both The Financial Conduct Authority and the Pensions Regulator to support them to produce suitable communications during the Covid-19 outbreak.

Please see links below for more information about the joint statement from Regulators and the Money Advice Service, and help available, produced by the Pension Protection Fund and supported by government.

https://www.fca.org.uk/news/press-releases/covid-19-savers-stay-calm-dont-rush-financial-decisions

https://www.ppf.co.uk/sites/default/files/file-2020-05/COVID-19-and-your-pension.pdf

In addition, the Government, working with the regulators and the Money and Pension Service, has been communicating with pension savers to alert them to the risk of scams in the current climate. DWP continues to communicate regularly on social media about the warning signs of a scam.

We have adopted an approach that not only safeguards against pension scams but assists all pension savers seeking to access their pensions.

For all pension savers aged 50 and over, in the lead up to accessing their pension savings, our aim is to support them make informed choices about their retirement income. We are therefore committed to replicating measures introduced by the FCA for contract based schemes for occupational pension schemes and requiring trustees to provide information to pensions savers from the age of 50, in a simpler format, to encourage savers to think about their retirement savings, choices and raise awareness of Pension Wise.

We want to encourage savers to take appropriate guidance via Pension Wise when they apply to access savings. We want to present taking guidance or advice as a natural part of the journey when individuals access their pension savings. We are working with the FCA on rules that would require managers of private pension schemes to Introduce parallel provisions.

The Government is committed to safeguarding consumer savings and continues to raise public awareness of scams through ongoing communications directly from DWP and with other organisations.

DWP continues to communicate regularly on social media to set out the warning signs of a scam and has made multiple posts referencing Pension Scams and #ScamSmart in total across Twitter, Facebook and LinkedIn in the period March to September 2020.

In addition, Pensions Dashboards will help more people actively manage their pension savings and plan for their retirement, and this will include making decisions about pension consolidation, particularly for deferred defined contribution pots. Initial dashboards will enable a user to find and view their pension savings in one place. Future functionality will be informed by user research and testing, and consumer protection will be a primary concern in this decision making.

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