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Fraud losses from pension freedoms 25% higher than anticipated

By January 26, 2017 October 22nd, 2020 No Comments
Employee BenefitsPensions

Fraud losses from pension freedoms 25% higher than anticipated

By January 26, 2017 October 22nd, 2020 No Comments

Recent statistics from City of London Police suggest that losses due to fraud after pension freedoms were introduced could be around 25% higher than was initially estimated.The figure originally reported to the force for the first six months from April 2015 was £10.6 million.This figure has recently been revised to £13.3 million following updated statistics, due to the updating of reports by victims to reflect the full amounts lost. The new figure demonstrates a 146% rise year-on-year in reported fraud from the £5.4 million figure recorded during the corresponding period during 2014.

The figures have played a large part in the call for a complete ban of cold calling in the pensions sector, with a petition to the Government having attracted well over 7,000 signatures at the time of writing. Those in the pensions industry have criticised the Government for ‘sitting on its hands’ with regards to taking action against pension scammers.

“The good financial advice companies don’t need to cold call. Government services don’t cold call”, explains Michelle Cracknell, head of the official government-funded Pensions Advisory Service. She went on to refer to the number of calls we all receive about PPI and whether we’ve had a car accident but explained that this would be coming to an end under new regulation, making pensions the next potential sector for scammers to target. She was adamant that putting a ban on cold calling would give customers added protection, as it would help vulnerable people to know that any cold call they received about their pension was suspicious.

It is estimated that over 10 million pensioners are now being targeted every year by cold callers, a figure which has risen considerably since the introduction of pension freedoms. As scammers often put the money through several companies based overseas, this makes it incredibly difficult for investigators and forensic accountants to identify the criminals and where the money has come from. Mrs. Cracknell admitted that her organisation has been forced to advise those who contact them about being scammed that they have virtually no chance of retrieving their money.

Anyone looking to access their pension savings should ensure that the person, or company, they are dealing with holds the appropriate qualifications and regulatory permissions and that they are providing Regulated Independent Financial Advice. People should always take time to check the credentials of who they are dealing with, especially given the downside risk set out above.

If you feel that your staff would benefit from our help and advice in this particular area, both in respect of the options that may be available to them through Pension Freedoms and the steps they can take to ensure they are not unintentional victims of fraud, then we would be happy to discuss how our Financial Education and Advice services could be applied in this area. Please contact your normal Creative consultant to discuss this, or contact us on info@creativeeb.co.uk

Sources
https://www.telegraph.co.uk/news/2016/10/30/pension-cold-calling-ban-would-protect-vulnerable-from-losing-li/
https://www.mindfulmoney.co.uk/mindful-news/fraud-losses-from-pension-freedoms-may-have-been-at-least-13-3m-25-higher-than-thought/