The scale of pension fraud appears to be far in excess of figures reported to Action Fraud.
A report published by The Police Federation highlights the scale of the problem, saying this fraud is complex and presents challenges for the industry, police and regulators.
The report has been welcomed by The Pensions Scams Industry Group (PSIG), whose chair warned that pension fraud was rising in the wake of the coronavirus pandemic.
PSIG chair Margaret Snowdon says: “As we all know the issue of pensions scamming is not going away, if anything it is on the rise as more and more questionable individuals have recognised the extreme vulnerability of pension scheme members.
“This has only increased during Covid when finances for some have become even more strained. When the Police Foundation approached us ahead of this project we were very happy to work in partnership with them to develop the industry survey and to inform the findings of the report.”
She said the report highlighted a number of issues that PSIG has been report for some time.
She says the pension schemes that engage with members over the telephone over suspected fraudulent, rather than by letter, can help prevent scams taking place and this should be encouraged.
But Snowdon adds that the statutory right to transfer continues to see huge sums of money transferred even when significant pension scam concerns exist.
She says evidence suggests that more than 60 per cent of scheme members choose to transfer, even when the ceding scheme has outline fraud concerns.
She adds that dedicated funding for both Project Bloom (the multi-agency initiative led by the Pensions Regulator which aims to combat pension scams) and for PSIG would be beneficial and that the absence of such funding is a key constraint at present.
Snowdon adds: “The recommendations of the report also include key changes which we have called for some time.” This includes:
- Required compliance with best practice due diligence (which PSIG has outlined in our Code of Good Practice).
- Improved pension scam reporting and that this should be mandated.
- A central intelligence database and for knowledge to be better shared both within the industry and with Bloom partner agencies.
- Better support for victims and, in particular, for the relaxation of HMRC’s approach to unauthorised payment tax charges. All victims are currently treated as willing participants in the scam and this is entirely unfair and must be addressed.
“PSIG is absolutely committed to working with the Police Foundation, and with Project Bloom, to progress the recommendations outlined in the report and we commend them for this excellent report. We must afford our pension scheme members the protection that they deserve, this project takes us a step closer to that.”