Autumn Statement 2016: Government plans to tackle pension scammers
The government will publish a consultation looking at ways to tackle pension scams before Christmas, chancellor Philip Hammond announced in his Autumn Statement.
Hammond told parliament he plans to give firms "greater powers to block suspicious transfers" and make it "harder for scammers to abuse small self-administered schemes".
The proposals will include banning businesses from cold calling someone about their pension and stopping scammers targeting people who inadvertently opt-in to receiving third-party communications.
The policy was widely predicted in the run up to the statement, with the issue coming to the fore after a petition started by financial adviser Darren Cooke gained traction recently, winning support from former pension ministers Steve Webb, now director of policy at Royal London, and Ros Altmann.
“A victory for common sense”
Before the Autumn Statement began the petition had collected almost 8,000 signatures, just over 2,000 shy of the number needed for the government to be compelled to respond.
However, Hammond looks to have pre-empted that by including it in his Treasury announcement.
Altmann congratulated Hammond, calling the outcome "a victory for common sense". 'We have to do whatever we can to protect the public against fraudsters,' she explains.
"We need to be able to give the clear message that if someone contacts you out of the blue about your pension they are breaking the law - they are criminals. By making cold calling illegal, it is much clearer for the public that they should not engage with such people."
Stephen Lowe, group communications director at Just Retirement, also welcomed the ban on cold calling, "backed by stiff penalties", as a step in the right direction. However, he adds, more needs to be done to support people as they make choices around their later-life finances, including making the government's free Pension Wise service 'the default option' for those retiring.
Kate Smith, head of pensions at Aegon, hopes the measures go further than just tackling cold calling to cover texts and emails, which are two other common techniques used by scammers to try to part people from their hard-earned cash.
"Scams are constantly evolving," she says; "as soon as you remove one fraud method, another variant on the old scheme pops up. A ban on cold calling won't be foolproof, but at least it will put more people on their guard and criminalise those who make the calls."
How to spot scammers and protect your pension
Calum Bennie, savings experts at Scottish Friendly, was more cautious, admitting concerns that the government may have softened its stance and turned what had been mooted as a ban into a consultation.
Therefore, people must "continue to be very cautious about approaches that are made to them by cold callers". Here, Bennie outlines a number of ways savers can protect themselves until any action is taken:
- Be wary of people or companies claiming knowledge of tax loopholes, offering to unlock your pension before age 55 or promising to secure extra tax savings that are outside the current pension rules and regulations.
- Watch out for individuals or companies offering very high returns from overseas or 'unusual' investments.
- Beware companies that attempt to rush you into making decisions. If they are applying pressure to transfer funds or send documents quickly and you feel unsure, contact The Pensions Advisory Service before making a decision.
- If you are approached out of the blue over the phone, via text message or in person; or the firm in question only has a mobile number, a website or a PO Box number as contact details then be cautious - you are probably best to avoid engaging in any dialogue.
- Check that the firm you are dealing with is registered with the FCA before signing anything. You can also check the FCA's Scamsmart warning list. The list contains the names of known investment scheme scams.
A tax-efficient way of receiving staff benefits, where an employee agrees to forego a proportion of their salary for an equivalent contribution into their pension scheme or in exchange for company car, gym membership, childcare vouchers or private medical insurance. A salary sacrifice scheme is a matter of employment law, not tax law, and is often entered by an employee who is about to move into the higher 40% tax bracket.