The government is clamping down on scammers taking advantage of pension freedoms by cold calling with new measures, announced in the Autumn Statement.

Under new rules, regulators will have the power to fine those responsible for calling up to £500,000.

The only people able to call pensioners with an investment opportunity will be regulated companies who have a previous relationship with the recipient.

Pension reforms introduced in April allow savers aged 55 and over to withdraw any amount of savings from a defined contribution scheme they want to, subject to tax.

This has seen an increase in opportunistic callers offering highly risky or spurious investment opportunities, which often begin with the promise of access to savings below the age of 55, or 'free' pension reviews.

Former pensions minister Ros Altman, praised the move: "We have to do whatever we can to protect the public against fraudsters and by making cold calling illegal,' she said.

"Now it is much clearer for the public that they just should not engage with such people."

Malcolm McLean, senior consultant at Barnett Waddingham, said the decision is long overdue.

He said: "Whatever the merits or demerits of pension freedoms, there is little doubt they increased the scope for the scammers to target many more vulnerable people, who in many cases for the first time had access to large cash amounts.

"We must continue to emphasise that individuals have to accept responsibility to protect themselves as best they can, and decline to deal with anybody they don't know or who contacts them out of the blue."

Pension Life, an organisation set up to identify and prevent pensions scams, also welcomed the move to close loopholes in pensions law.

Angela Brooks, Pension Life chairman, said the plans are a "golden opportunity" but the government could not afford to become complacent.

She said: "While I have no wish to detract from the good news, the government must recognise that cold calling is only one of the tools in the scammers' arsenals and that their tricks and techniques are constantly evolving.

"Sadly, it is not just unregulated scammers who are promoting such scams, but a few regulated UK firms as well."

First published 25.11.2016

Lindsay.sharman@wilmingtonplc.com