The Pensions Regulator has planned a ban on cold calling pension scams. Here we outline what you need to know about the ban and how to protect yourself from a scam.
The Issue with cold calling Pension Scams
The Pensions Regulator is leading Project Bloom, a cross-government taskforce including regulators and law enforcement agencies to help monitor trends, share intelligence and help co-ordinate action to tackle cold call pension scams. We have outlined what the planned ban on cold calling sales means to pension scheme members and what you can do to help protect yourself from cold calling pension scams.
Evidence for the Ban
The ban comes at a time when recent research suggests that there could be as many as 8 scam calls every second, which is the equivalent of 250 million calls per year. It has been calculated that 10.9 million customers have received unsolicited contact about their pension since April 20151
. As pension investments are long-term, many individuals are unaware that they’ve been a victim of a scam until they access their savings.
The government also suspects that reports of fraud to the police are underreported. This could be because the victim would be worried about facing a tax charge for unauthorised pension access. To help alleviate this fear, the government is working with HMRC, Action Fraud and the National Fraud Intelligence Bureau through Project Bloom.
The ban covers a three-pronged approach to prevent cold calling pension scams. These are:
• A ban on cold calling in relation to pensions to help stop fraudsters contacting individuals.
• Limiting the statutory right to transfer to some occupational pension schemes.
• Making it harder for fraudsters to open small pension schemes.
A cold calling ban will cut off a key source for pension scams 2
and help the public by simplifying the anti-fraud message: you will never be cold called about your pension.
How to protect yourself
The best way to protect yourself from a pension scam is by knowing what fraudsters are trying to achieve. You might be targeted as a victim of pension fraud if the fraudster tries to get you to:
• Release funds from an HMRC registered pension scheme, often resulting in a tax charge that is normally not anticipated by the member.
• Flexibly access your pension savings in order to invest in inappropriate investments (usually targeting individuals over the age of 55).
• Transfer your pension savings in order to invest in inappropriate investments (usually targeting individuals under the age of 55).
If you need more advice or guidance and are over 50, please contact Pension Wise