Pension scams

Pension scams

The PLSA has proposed that the Government should introduce an authorisation regime for pension schemes as a means of tackling pension scams.

Responding to a consultation from DWP and HM Treasury, the PLSA said the authorisation regime should 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.

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

The Government has published its long-awaited to the 2016 consultation exercise on pension scams, but the prospects for urgent legislation look limited.

The Government response, published jointly by DWP and HM Treasury, confirms that the Government still plans to go ahead with its proposed ban on cold calling about pensions and some narrowing of the right to a transfer, but the next step will be to engage further with the industry on implementation; there is no timetable for the necessary legislation.

There will be faster progress on ensuring that only active companies may register a new pension scheme, which will be taken forward in a Finance Bill following the autumn Budget.

The PLSA welcomed the Government’s announcements as a ‘step in the right direction’, but noted that ‘there is much more the Government could do to protect savers from pension scams sooner rather than later’. The PLSA continues to call for the introduction of an authorisation regime for pension schemes, but the Government’s consultation response suggests that that this issue cannot be addressed until the Master Trust authorisation system has been introduced in 2019.

The PLSA is now co-ordinating discussion with members and other stakeholders on further steps to tackle scams.