Last week’s “Too good to be true” report issued by Citizens Advice contains findings that show that the Pensions Regulator is right to relaunch its Scorpion Campaign as Pension Scams are still prevalent and are evolving to snare those who are considering their options following the introduction of pensions freedoms.
It is clear however that information is not enough. Protective action is required so that the hard-earned pension savings of thousands of employees are used for what they were intended for – a comfortable retirement and not to line the pockets of the scammers. It is clear that the route to the money is through high levels of unsolicited contact or cold calling and the money is directed to highly speculative or fraudulent investments. The calls are sophisticated and therefore it can be challenging for the public to identify scam calls. It is difficult to cut off the scammers route to the money at its source.
We would call on the Government to legislate to protect consumers. Legislation is required that:
- Regulates Professional trustees;
- Regulates Scheme administrators;
- Provides additional Regulation of schemes where no employment link is required for membership – not only the questionable occupational scheme but the one man arrangements and overseas schemes with no link to overseas residence;
- Provides a power for trustees to prevent transfers where they have reasonable concerns about the validity of the receiving scheme. Give the transferring schemes the power to cut the money off at its source;
- Bans investment in certain forms of unregulated investment from any pension vehicle other than a SiPP.
The Government should also consider how to deal with the sham schemes that are set up to receive the money, and put resource behind tackling the cases where a scam is identified.
The public has lost faith in retirement savings. As a result we are sitting on a critical long-term problem of potential poverty in old-age for the vast majority of the current working population. It is time for the Government to stop thinking about short-term financial considerations and think about the long-term. The Government should be applauded for the action it has taken with a view to stopping leaks from the system – including the introduction of charging caps. But sizeable leaks continue. Until those leaks are fixed, confidence cannot be restored, and with the introduction of pensions freedoms will just get bigger …