The Department for Work and Pensions (DWP) has launched a consultation on new proposals aimed at protecting pension savers from fraudsters by automatically blocking suspicious transfers. The measures target Small Self-Administered Schemes (SSASs) where there is no clear connection between the saver and the scheme.
New Warning Flags for Suspicious Transfers
Under the proposed plans, pension schemes would be empowered to halt transfers if warning signs indicate potential fraudulent activity. This intervention is designed to prevent criminals from exploiting savers, who often lose their retirement funds to bogus schemes.
Pension scams are among the most damaging forms of financial fraud, with average losses of £18,400 per victim. In cases involving SSAS arrangements, average losses rise significantly to £38,400.
Government's Commitment to Combat Fraud
Pensions Minister Torsten Bell stated: "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."
The consultation is part of a broader government initiative to tackle pension fraud and improve protections. Alongside the new safeguard, ministers are reviewing regulations to simplify legitimate transfers while maintaining robust scam detection.
Industry Response
David Brooks, Head of Policy at Broadstone, welcomed the proposals: "The Government is right to maintain a laser focus on pension scams and developing a comprehensive and robust scam protection framework will be essential." He emphasized that SSASs are often misused by fraudsters to access pension savings.
Gaucho Rasmussen, Executive Director at The Pensions Regulator, added: "Fraud wrecks lives – and tackling it demands strong, coordinated action. The targeted safeguard proposed is an important step forward in protecting savers."
Next Steps
The consultation is open for feedback from pension trustees, administrators, industry professionals, and scheme members. Further anti-fraud measures, including potential new legislation, are expected later this year.
As defined contribution (DC) pension savings grow, larger retirement pots become more attractive targets for scammers. The DWP aims to stay ahead of evolving fraud tactics, including sophisticated investment structures and digital channels used by criminals to gain trust.
