The Work and Pensions Committee (“WPC”) has launched an investigation into pension scams in the UK and what more can be done to prevent them. This is the first part of a three-stage inquiry that will examine the impact of pension freedoms and protecting pension savers.
It has been five years since the Government introduced pension freedoms in 2015, aimed at giving people aged over 55 more control over how and when they access their retirement savings. Chair of the WPC, Stephen Timms, recognised that, “more flexibility means more potential for the unscrupulous to take advantage and scam savers” and that “reported frauds could be just the tip of the iceberg“.
In June, campaigners had written to Mr Timms highlighting the “extraordinary” fact that there is no official figure for the amount of money lost every year from pensions scams in the UK. See our previous blog post on this here.
In its announcement this week, on 28 July 2020, the WPC noted that 180 people reported to Action Fraud that they had been the victim of a pension scam in 2018, losing on average £82,000 each. However, it was also acknowledged that the UK’s financial and pensions’ regulators agree that only a minority of pension scams are ever reported.
WPC call for submissions
The WPC is seeking views and comments on the prevalence, trends, and common outcomes of pension scams, and what more public bodies could do to tackle them. The deadline for submissions is 9 September 2020. There will likely be a formal call for evidence next year.
Industry experts have broadly welcomed the inquiry and commented that it will give pension scam victims hope.
It may also give firms hope that recent hikes in the levies that fund the Financial Services Compensation Scheme (which compensates victims claiming against unscrupulous firms) will cease if the Government and pensions industry is able to get scams under control.