Pension scams

Pension scams

The PLSA supports recent Government initiatives to tackle pension scams, such as banning cold-calling about pensions, but wants Ministers to go further by introducing an authorisation regime for pension schemes.

The PLSA would focus an authorisation regime 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.

Under the PLSA’s proposal there would be a legal requirement for smaller schemes that are new or wish to accept transfers to appoint an independent professional trustee with a duty to blow the whistle if they suspect a scam.

This requirement would be backed up by a mandatory qualification for independent professional trustees based closely on the requirements for trustees of master trusts.

An alternative would be for small schemes to have a recognised professional, such as a lawyer, accountant or actuary, as the independent trustee.

SCAMS – THE STATE OF PLAY

Parliament has now approved the Financial Guidance and Claims Act – the legislation banning cold-calling about pensions.

The PLSA understands that HM Treasury is looking to make quick progress on introducing the supporting Regulations required to bring the cold-calling ban into effect.

The ban will allow schemes and providers to issue a strong message to savers that they should ignore any pensions-related call other than from their own provider. The PLSA has welcomed this as a step forward, while still raising concerns that the most determined scammers will circumvent the ban. The PLSA will continue pressing for a more comprehensive approach to scams based on an authorisation regime for pension schemes.

CODE OF PRACTICE

The PLSA is pleased to support the Pension Scams Industry Group’s Code of Good Practice which sets out practical steps that pension scheme managers and trustees should take to protect their members from scams.