Since 2015 the Insolvency Service has successfully applied to the courts for 24 companies to be wound up due to ‘pension misuse’.
This government agency said more than £202m was invested via these companies. It added that there were 3,750 victims affected, this included both individuals and businesses.
The term “pension misuse” covers a range of activities: from investment scams, to pension trustees failing to carry out their duties properly.
In one case four directors of companies involved in the misuse of £57m of pension funds were banned for a total of 34 years.
The Insolvency Service also revealed that another investigation led to Fast Pension – and five connected firms – being wound up in May 2018. Between 2012 and 2013 520 people were encouraged to transfer their pension savings from existing providers into one of 15 schemes, with Fast Pensions acting as the sponsoring employer.
A total of at least £21m was invested, and people were persuaded to transfer their savings through various methods, including cold calls offering ‘free’ pension reviews. A government ban on pension cold calls has recently come into place.
In many of these reviews advice was inadequate and advisors failed to disclose information about returns and the high risk and illiquid nature of the investments made by these schemes.
Victims of pension scams lost an average of £91,000 each to fraudsters last year, according to figures from the FCA and TPR’s ScamSmart campaign.
The Insolvency Service said it hoped publication of these figures would serve as a warning for consumers to guard their pensions savings from investment scammers and negligent trustees.
Consumer minister Kelly Tolhurst says: “The Government continues to work closely with the Insolvency Service to clamp down on rogue companies targeting vulnerable people.”