The three main regulatory bodies have joined forces to issue a statement urging investors to remain calm, and avoid making ‘rushed’ financial decision in response to the Covid crisis.
The Pensions Regulator (TPR) The Financial Conduct Authority (FCA), and The Money and Pensions Service (MaPS) are concerned the conditions could leave savers vulnerable to scams. They add that decisions made purely in response to the current panic may damage many people’s long-term financial interests.
The regulators recommend savers visit the Pensions Advisory Service website, before making any decision about their retirement savings. This service also offers a telephone helpline.
The coronavirus outbreak has impacted on all kinds of companies, including those listed on the stock market. As a result, markets have been volatile and are likely to remain so for a while. This can have an impact on pensions, leading to additional worry for savers. It can lead to an increase in scams, as unscrupulous people try to take advantage of the situation.
MaPS head of pensions operations and consumer protection Charlotte Jackson says: “This is a very worrying time for people. For those on the point of retiring, the impact of the virus on the financial markets and therefore on pension savings has been damaging.”
She points out that with many workplace pensions investments are designed to deliver over the long term with measures in place to reduce the risks faced by investors as they approach retirement.
However as data compiled by Corporate Adviser shows the extent to which pension schemes in the DC space ‘de-risk’ varies hugely.
TPR’s chief executive Charles Counsell says: “Pensions remain a safe long-term investment for your retirement and it’s important to avoid hasty decisions about cash that’s taken a lifetime to build.
“We urge you not to transfer your pension into another arrangement now and regret the decision later. If you’re worried about your pension savings, take the time to understand what options you have available. There is no need to rush.
“For those who have a final salary pension, staying in your existing scheme is still likely to be the best long-term arrangement. All savers should be very cautious about making changes at this time.”
The FCA’s executive director of enforcement and market oversight Mark Steward adds: “Fraudsters will exploit the coronavirus to prey on anxiety and fear of savers and investors, especially those who may be vulnerable. That’s why we’re urging anyone who is thinking about transferring their pension to check who they are dealing with and only use firms authorised by the FCA.
“Reject all unexpected and unsolicited offers; get to know the warning signs of scams, like high rates of return which sound too good to be true, so-called special offers or pressure to make a quick decision and check our tips and advice on our ScamSmart website.”
Former pension minister, Steve Webb, now a partner at consultants LCP says these warnings are timely, and he is receiving many questions from consumers about the fall in markets.
He adds: “The questions I am getting at the moment from members of the public very clearly reflect anxiety about the slump in markets and worry about the potential for further falls.
“It is vital that consumers are protected from con merchants who sound convincing but are actually out to prey on the vulnerable. It is shocking that at a time when we need to pull together there are people who see this as an opportunity to cash in on people’s anxieties.
“Savers need to check with impartial sources of advice and guidance before making big decisions about their finances, especially in the current climate, and not be pressurised into doing something they will later regret.”
