Pensions - Articles - Industry comments on new Pension scam guidance

Industry comments from Aegon, Canada Life, XPS pensions Group, LCP and Broadstone on DWP and TPR new pension scam guidance

 Kate Smith, Head of Pensions at Aegon said: “Confirmation of additional protections for pension scheme members is a major win for common sense over unscrupulous scammers. Trustees and pension scheme providers have long wanted to protect individuals when they fear the risk of a scammer stealing the individual’s life savings and from later this month, they’ll have greater legal powers to do so. Schemes will now be able to intervene and stop a transfer if the information they have sends up a ‘red flag’. Referring individuals to Pension Wise for scam guidance is also a helpful step forward.

 “We’re pleased, however, that the Pensions Minister plans to review the effectiveness of these measures going forward. Scammers are always looking for new ways of parting people from their money and Government, regulators, schemes and providers must continue to work together to maximise member protection.”

 Andrew Tully, technical director at Canada Life: “Measures to protect individuals from pension scams are welcome. It is well documented how many people are affected by scams and there are many sad personal stories behind the large monetary amounts involved. However there are relatively few scams around transfers before age 55, as most people know there are only very limited circumstances where you can access your money legally before age 55. Instead scammers largely wait until people can legally access their money from age 55 onwards and these measures do nothing to prevent those scams.

 “While more safeguards are helpful, people want, and expect, pension schemes and providers to move money to a new provider quickly and safely. We need to make sure the vast majority of transfers which are being legitimately transferred by the member are not unduly delayed by these new measures.”

 Mark Barlow, Head of Member Options at XPS Pensions Group, commented: “We welcome the strengthening of the transfer regulations and our experience suggests that that they will make a real difference in the fight against pension scams. However, satisfying these regulations isn’t a guarantee that a transfer isn’t a scam and so trustees should look out for wider warning signs, such as a member in good health being told they can access their benefits before age 55. Trustees need to act immediately to decide how they will assess the flags and to put in place an efficient and effective process to obtain the information from members. They should also let their members know as soon as possible about these additional checks and the circumstances in which their transfer may be blocked so this does not come as a shock.”

 Helen Cavanagh, Client Lead for the XPS Member Engagement Hub, added: “Having provided a Scam Protection Service to pension schemes since 2015, we empathise with trustees who will have to develop and implement a robust process in three weeks. It’s critical that trustees immediately review what their administrators currently do and what gaps they need to fill to satisfy the regulations. These regulations are going to require trustees to gather more information directly from members. Our experience is that speaking directly to members is the only reliable way of collecting this information.”

 Daniel Jacobson, Senior Consultant and the lead of LCP’s Pension Scams Group said: "Trustees have historically effectively been powerless to block transfers where a scam is suspected, leaving members vulnerable to not only the risk of a loss of income in later life, but also incurring heavy tax penalties in the present day – a double financial penalty. We welcome that the new regulations now give them back some of this power and that the requirements will, in many cases, substantially increase the evidence and information required before a transfer can proceed.

 “However, although DWP has stated that they think that 95% of transfers do not have scam risks, these new checks will still need to be applied to 100% of transfer requests in order to identify that rogue 5%. And whilst these regulations will help protect members, there is only a three week period before they come into force. This is a small window of time for what will mean big changes in how trustees and administrators deal with scams. They will need to start working now to update their processes, procedures and communications to members. Having a paper trail of decisions and steps taken to warn members about scams will be important not just to show Trustees and administrators are following the new rules but to help them defend their position if challenged in future.”

 David Brooks, Technical Director at Broadstone: “The scam rules proposed in the Pension Scheme Act 2021 will come into force on 30 November, with the final rules only published on 8 November 2021. This is a challenging lead-time but one trustees/administrators and providers across the land are going to have to rise to. “The conditions which must be met for a statutory transfer to proceed are designed to combat a particular type of scam, the Small Self Administered Scheme (SSAS) scam. This involves a bogus SSAS, established with a dormant sponsor with fake employer and no contributions. This scam does still exist and so the new power for Trustees to refuse a transfer will be a powerful one and will be used.

 “The rules are not perfect as they will require more work for bona fide transfers going to many providers whether they’re regulated by FCA and PRA or not with a minimal safe list including Master Trusts, public sector schemes and CDC schemes only. All other transfers will fall into condition 2 which is a aggregation of all the other conditions previously proposed but with a clearer emphasis that if a transfer looks suspicious the trustees can stop the transfer.
 “Trustees will need to ensure that processes are up to date. We know a key focus for the Pensions Ombudsman will be ensuring schemes issue updated and compliant communications. Trustees should also be ready for more work and cost – more cases that don’t fit the conditions requiring additional risk warnings to be issued will result in increased levels of involvement from them.”

Back to Index

Similar News to this Story

Survey reveals over a third are not saving for retirement
The EU pension savings gap persists, with more than a third of respondents not saving for their retirement, according to the results of Insurance Euro
Bulk annuities and navigating the derisking journey
The slower start to the bulk annuity market in 2021 could lead to some heightened appetite amongst certain insurers going into the early part of 2022
Cut in universal credit taper gives low earners more money
Kate Smith, Head of Pensions at Aegon, comments: “We welcome the Government taking steps to put more money in the pockets of hard-working individuals

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.