As coronavirus started to bite, I was very concerned that scammers would take advantage of the crisis and ramp up (to use the oft repeated phrase of the moment) their efforts to rob more people of their pension savings. I thought we might see some new forms of pension scam emerging. I saw some new on-line adverts coming out, responding to the economic climate, claiming that existing pension savings were at risk of severe losses, that we are heading for a global recession and that the ideal solution is to transfer to a once in a generation investment opportunity. Apply now to take advantage! And no, this wasn’t just from some backroom operator – such enticements were coming from mainstream firms too. I could see trouble ahead.
However, so far, we have not seen a surge in pension scams and we are not seeing any new types of pension scams coming forward. This is good, but let’s not be complacent.
One of the side effects of the crisis and lock down, is that pension firms have had to focus on priority work and transfer processing has been bumped in favour of highly emotive transactions like deaths and retirements and critical continued payment of pensions. This is absolutely right. Firms are also contending with massively increased home working and with pressures on hardware, connectivity, data protection and looking after their own staff welfare.
The Pensions Regulator has offered some welcome relief to transfer processing, with 3 months of “looking the other way” on delays. They have also asked schemes to warn members directly of the dangers of scams during coronavirus and are actively encouraging administrators to follow the PSIG Code of Good Practice on Combating Scams, which can be found [here] or on the PLSA website if you can’t access Dropbox. This is a positive step, because from talking to schemes, we know that some providers don’t carry out enough due diligence; they don’t see it as their job.
I have heard some providers reporting that DB transfer requests are down on last month and this is very helpful and encouraging. I suspect it shows that people have bigger worries than their pension right now and, to be honest, scammers have juicier opportunities at the moment. But pension scammers have not gone away.
Scammers in general have certainly increased their activities during the coronavirus crisis – but they’ve focused directly on virus fears by offering phoney products and false hope. People are at home and more vulnerable to telephone, on-line and social media approaches. Anything with the “C” word in it draws people like a magnet. Villains are not in lockdown, so I think it is only a matter of time before attention turns again to our pension savings. People are already struggling to make ends meet and many employers are in a bad way. We’ve seen some increase in enquiries about accessing funds before age 55 and this is not surprising. More people will try to access funds early, either by asking the scheme directly, or encouraged to transfer out by scammers and unregulated advisers. And all this could come at a time when providers are struggling to catch up with the inevitable backlog of lower priority processes and their guards might be down. I expect there will also be a surge in compensation claims for past transfers, as people need to find a source of income and also see that their transfers from DB into DC arrangements have suffered significant falls in investment returns; there appears to be an increase in claims management firms willing to take on this challenge, so we need to be prepared for the return of the bad guys.
Enter a hero. I was delighted to see the launch of Scam Man and Robbin, a pension scams awareness computer game that came out of a recent Hackathon organised by PensionBee. I was fortunate to be one of the judges and loved the idea of a caped crusader and sidekick to help consumers understand the threats they face. The original caped crusader used wealth and technology to defeat the bad guys – we need to do the same. Activate the bat-(sorry, scam-) signal!
Margaret Snowdon, Chair of the PSIG
