New legislation will help protect pension savers from fraud and cybercrime, it has been announced.
The new rules will give pension trustees and scheme managers the powers to stop suspicious transfers “in their tracks”.
It comes after research revealed that nearly eight in 10 (79 per cent) over-55s had been approached by a scammer in the previous 12 months, while almost £2 million is lost to pension scams each year.
These types of scams often involve fraudsters offering “too good to be true” incentives, such as free pension reviews, early access to pension cash, or other time-limited offers.
In one example reported by consumer comparison site Which, a pensioner lost more than £50,000 after being persuaded to transfer her retirement savings into a bogus investment scheme.
In an effort to stop these scams in their tracks, trustees and managers will be given the power to “red flag” transfer requests and halt the transaction until it has been reviewed by a trusted professional.
The new legislation will come into force on 30 November 2021.
Commenting on the new rules, Minister for Pensions Guy Opperman said: “We are tackling the scourge of pension scams in practical terms to safeguard pensioners’ hard-earned savings.”
Anthony Arter, Pensions Ombudsman, added: “Having witnessed the real damage that pension scams can inflict on an individual’s retirement I welcome the new transfer regulations which look to make transfers safer.
“I am optimistic that over time statutory clarity regarding the level of due diligence expected of trustees and additional information and guidance to be given where appropriate to those planning to transfer, will help combat pension scams, and also reduce the number of transfer complaints to The Pensions Ombudsman.”
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