Last week, the Pensions Regulator (TPR) launched a new initiative that asks pension scheme trustees, administrators, advisers and providers to publicly pledge that they are taking appropriate action to protect their scheme members from scammers. The pledge is aimed to encourage better understanding of the warning signs of a scam, and to improve internal processes that could protect members.
Pension scams have been an increasing problem in recent years, with members targeted either to transfer their defined benefit pension pots in to a fraudulent scheme, or to a legitimate scheme but encouraged to invest in high-risk or unregulated investment options. Norton Rose Fulbright has also witnessed a growing number of unregulated financial advisers targeting pension scheme members. TPR, the government and HMRC have made a concerted effort to encourage trustees to protect members against scammers, including by the publication of a checklist that trustees should use when a member requests a transfer (see our previous blog here). Action Fraud estimates that over £30 million of defined benefit pension benefits have been lost to scammers since 2017.
The new pension scams pledge campaign encourages trustees, administrators, pension providers and advisors to voluntarily sign up to an online pledge, stating that they will regularly warn members of the risk of scams, encourage those requesting cash drawdown to call The Pensions Advisory Service for guidance, learn the warning signs of a scam and best practice for transfers, take appropriate due diligence measures and document pension transfer procedures, clearly communicate concerns to members if high-risk transfers must be made, and finally report concerns about a scam to the authorities and communicate this to the scheme member.
These six commitments were developed by TPR alongside the Pensions Scams Industry Group, a body made up of a cross-section of organisations from the pensions industry, that in 2015 developed a comprehensive code of good practice to assist schemes in protecting members.
If you would like more information or assistance on how to protect the members of your scheme against pension scams, or the obligations by which you are bound in relation to pension transfers, please speak to your normal Norton Rose Fulbright pensions contact.
Organisations can make the new pledge here.