The Department for Work and Pensions (DWP) has unveiled new plans this week that will impact millions of pension savers across the UK. The proposals are designed to tackle the concerning issue of pension fraud, which has resulted in some individuals losing thousands of pounds.
New Safeguards Against Pension Scams
In an announcement on Tuesday, June 9, the government stated that pension savers will be "better protected" from scams under new plans. The government is acting to stay ahead of increasingly sophisticated fraudsters who rob people of their lifetime savings. The new proposed safeguards aim to tackle pension fraud by ending the misuse of Small Self-Administered Schemes (SSAS), where average losses have risen to £38,400 per person.
How the New Proposals Work
Pension scams are among the most damaging forms of financial fraud. Fraudsters trick savers into transferring their pension pots into bogus schemes, often leaving victims unable to recover their losses. The new proposals would mean that where there is no clear link between a saver and the SSAS scheme they are transferring into, a new warning flag would be triggered, enabling the transfer to be stopped.
The consultation also seeks views on cutting red tape that has been slowing down legitimate transfers. The government says this will make the process simpler for savers who are not at risk of pension fraud.
Government and Industry Response
Torsten Bell MP, Minister for Pensions, said: "Pension scams can rip away not just people’s savings, but the retirement they are looking forward to. This Government is determined to stay one step ahead of criminals who seek to exploit savers. Too often we see fraudsters trying to trick workers into transferring their savings into bogus pensions. We are stepping in to automatically block transfers where the warning signs are flashing red."
Tuesday's consultation has been described as the first step in a wider government programme to tackle pension fraud, working with government departments and industry stakeholders, including the Pension Scams Action Group (PSAG). Further measures, including potential new legislation, are being developed this year.
Gaucho Rasmussen, Executive Director of Enforcement and Executive General Counsel at The Pensions Regulator (TPR), on behalf of the Pension Scams Action Group (PSAG), said: "Fraud wrecks lives – and tackling it demands strong, coordinated action. Through the Pension Scams Action Group, which TPR leads, we are working closely with the DWP, law enforcement, the pensions industry and other partners to identify emerging threats and stop fraudsters in their tracks. The targeted safeguard proposed is an important step forward in protecting savers. We urge trustees and administrators to have their say."
