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Government consultation on pension scams has closed

16 February 2017

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The Government consultation setting out a package of measures to tackle pension scams, has now closed.

The consultation set out three main areas, including a ban on cold calling, clarification on laws around blocking pension transfers, and changing the law to prevent fraudulent companies registering a scheme with HMRC.

The Pensions and Lifetime Savings Association (PLSA) has responded to the consultation by proposing an authorisation regime for pension schemes.

Regulation for setting up smaller pensions schemes is not fully effective in preventing them being used as vehicles for scams, the PLSA said.

Its proposals focus initially on all new schemes with fewer than 100 members, and existing schemes with fewer than 100 members, that wish to receive pension transfers.

This would cover Small Self-administered Schemes (SSASs) which, together with overseas schemes, present the greatest risk of being used as vehicles for scams.

Graham Vidler, director of external affairs for PLSA, said: "Pension schemes see scams as a major and increasing threat to their members' retirement savings, so we welcome the Government's commitment to tackle the issue - but a much more ambitious approach is needed."

"A new authorisation regime for pension schemes will offer savers robust protection from scammers who have been able to set up pension scam vehicles too easily in the past.

"The nature of the regime will depend on the risks presented, but we should start by introducing authorisation for the schemes with the greatest risks, such as smaller schemes and SSASs."

The PLSA also welcomed the Government's proposed ban on cold calling, but suggested the ban should cover text messages and other forms of digital messaging.

The Government has been criticised by Pensions campaign group, Pension Life, for its lack of action on pension scams over the last decade.

Pension Life, which was set up to identify and prevent pensions scams, as well as supporting scam victims, said the Government has been aware of the issue for the last 15 years, but has done little to combat it effectively.

Pension Life chair, Angela Brooks, said the ongoing inaction at Government level has made the problem worse.

"The Government and regulators should talk to the victims – it is clear there are still holes in the understanding of how scams work and how they have evolved over the past few years."

First published 16.02.2017

Lindsay.sharman@wilmingtonplc.com