The Department for Work and Pensions (DWP) has unveiled fresh proposals this week that could affect millions of people across the UK who hold a pension. The plans are intended to address a worrying problem that numerous people are currently facing, with some losing thousands of pounds.
In an announcement on Tuesday, June 9, the government said pension savers will be “better protected” from scams under new plans, as the government acts to stay ahead of increasingly sophisticated fraudsters who rob people of their lifetime savings. The new proposed safeguards aim to tackle pension fraud.
The protective measures are hoped to put an end to the misuse of Small Self-Administered Schemes (SSAS), with average losses rising to £38,400 per person. They form part of a broader government initiative to clamp down on pension fraud and ensure “more can save with confidence”.
Pension scams rank amongst the most devastating forms of financial fraud. Criminals deceive savers into transferring their pension pots into fraudulent schemes, frequently leaving victims with little hope of recovering their losses.
Under the new proposals, where no clear connection exists between a saver and the SSAS scheme they are transferring into, a fresh warning flag would be triggered, allowing the transfer to be halted, reports the Mirror.
The consultation also invites views on stripping back bureaucracy that has been hampering legitimate transfers. The government maintains this will streamline the process for savers who are not at risk of falling victim to pension fraud.
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 hailed as the opening move in a broader government initiative to combat pension fraud, working alongside government departments and industry stakeholders, including the Pension Scams Action Group (PSAG). Additional measures, including potential new legislation, are currently being developed this year.
Gaucho Rasmussen, Executive Director of Enforcement and Executive General Counsel at The Pensions Regulator (TPR), speaking 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.”