New law introduced to help protect pension savers from scammers
New rules to help protect pension savers from scammers have become law.
Under the regulations, pension trustees and scheme managers will be given the power to stop suspicious transfers before cash gets into the hands of fraudsters.
Fraudsters frequently offer ‘too good to be true’ incentives to pension savers, such as free pension reviews, early access to pension cash and other time-limited offers. Lured in by these bogus offers, individuals are then tricked into transferring their savings into a scam scheme and defrauded out of their money.
Between January and May 2021, pension scam losses totalling over £2.2 million were reported to Action Fraud.
The new regulations will take force on 30 November. From this date, trustees and scheme managers will be able to prevent transfer requests if suspicious activity is suspected by giving it a ‘red flag’. If a red flag is present, the transfer cannot go ahead.
Where fraud is suspected, trustees and scheme managers will be able to pause transfer requests by giving it an ‘amber flag’. In this scenario, the pension saver will need to prove they have taken scam specific guidance from the free Money and Pensions Service before the transfer can go ahead. This is the only way a transfer can then proceed.
Nicola Parish, The pension Regulator’s (TPR) Executive Director of Frontline Regulation, said:
‘We welcome these new regulations which further empower trustees to act as the first line of defence against scammers.
‘We are pleased these new rules enshrine in legislation two of the key parts of the pledge to combat pension scams – around due diligence measures and issuing members warnings of high-risk transfers.
‘We urge all trustees and pension providers to take note of these new rules and continue to play their part in stopping scams.’