Scams have been a common occurrence since the pension freedoms were unveiled in 2015 by then-chancellor George Osborne.
Staggering sums of money have been lost after people were convinced to invest in high-risk, esoteric schemes – many of which failed, losing retirees their life savings.
So it comes as little suprise that the UK’s work and pensions select committee is prioritising scams in its first inquiry, part of a broad review into pension freedoms.
In 2015, people aged 55 and over were given more choice about how they accessed their defined contribution (DC) pensions.
Five years on, the work and pensions committee said in a statement that it is looking at the next steps in preparing and protecting people moving from saving for retirement to using their pension savings.
Standard Life recently surveyed over 2,000 Brits and found 51% aged 55 and over admit they know little about the pension freedom rules.
Scams inquiry
The inquiry will be carried out in three parts and the first part will look at pension scams.
The select committee wants to know what more can be done to prevent them, and it is interested in finding out common scams, what happens to victims, and what public bodies can do tackle fraud.
Simon Harrington, senior public policy adviser at the Personal Investment Management & Financial Advice Association, said: “Pimfa is extremely concerned about pension scams and feels that the public needs to have more information at their fingertips about the dangers posed by what are often very sophisticated scams.
“We look forward to contributing to the investigation of the work and pensions select committee with our recommendations of how to tackle this issue, and continuing our work with our existing partners.”
This review comes weeks after the Pensions Policy Institute (PPI) published a policy paper on 19 May which said the insufficient information around scams will make it difficult to “effectively protect savers”.
Calls for evidence on pension scams
The inquiry is currently accepting evidence on pension scams.
The select committee wants submissions from anyone with answers to the follow questions:
- What is the prevalence of pension scams?
- What are the current trends in pension scams?
- What are the common outcomes of pension scams for perpetrators and victims?
- How are existing enforcement tools being used?
- What more can be done to prevent pension scammers operating?
- What more can be done to prevent individuals becoming victims of pension scams?
- What role should the pensions industry have in preventing scams?
- Is HM Revenue and Customs’ position on the tax treatment of pension scam victims correct?
- Are public bodies co-ordinating the response to pension scams?
Evidence can be submitted until Wednesday 9 September 2020.
Further stages of the pension freedoms review
In early 2021, the select committee will be looking at how savers access their pensions.
It will be asking about the range of options available to savers, and how advice and guidance supports their decision making.
A detailed call for evidence will be put out next year.
Finally, later in 2021, it will be looking at saving for later life and what more needs to be done to help people plan and save for retirement.
The work and pensions select committee will be asking if households have adequate savings for retirement and if there are measures the government should consider to reduce the gender pension gap and to support self-employed and gig economy workers save for retirement.
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