The research from The Police Federation and The People’s Pension concluded that greater powers are needed to help prevent transfers to suspected scam schemes.
As the Coronavirus pandemic continues to cause a rise in pension fraud, the research from workplace pension provider The People’s Pension and policing think tank the Police Foundation, found that from 13 pension providers alone, almost a thousand customers with combined savings of £54m were targeted by scammers last year.
Although pension providers are currently able to flag potential fraudulent activity to customers, according to the report neither they nor The Pensions Regulator were able to stop transfers; a key reason why two thirds of the 938 customers, still transferred £31m worth of funds despite the risk.
The report comes shortly after data was shared showing that a tool to help people report suspicious emails, launched by the City of London Police and National Cyber Security Centre (NCSC) in April, has received over 1.7m reports of phishing since its launch.
Phil Brown, director of policy at The People’s Pension, said: “Pension savings make up a huge proportion of personal wealth in Britain, with around £2.5 trillion accessible to scammers.
"For those people who fall victim to fraud, it can be devastating; many people lose their life savings and are hit with the double whammy of still having to pay tax penalties. For some people, they’re forced to sell their homes, while others have sadly taken their own lives as a result.
“Currently, pension providers can flag a potential scam to a customer, but we can only stand by and watch if the individual chooses to proceed with a risky transfer that could result in them losing all their savings.
“We’re calling on the Government to provide trustees, pension providers and regulators with the powers to stop risky transfers and ensure victims of fraud aren’t hit with having to pay tax penalties on their lost savings.”
Taxpayers have put at least £600 billion into pensions at risk of scams and this money must be better protected according to ex-Pensions Minister and pensions campaigner Baroness Ros Altmann.
She said: “The research suggest around £2.5 trillion of pension assets are at risk of being lost to scammers, and I estimate that at least one quarter of all pension funds originated from tax relief – for the largest funds it could be even more.
"Therefore, when a pension scam occurs, it is not only the pension saver that loses out. All taxpayers lose as well. This fact is too often overlooked. The Government needs to increase its efforts to tackle scams, punish perpetrators and protect that hundreds of billions of pounds of taxpayer money invested in pensions, because the purpose of the tax relief paid into people’s pensions was to ensure future taxpayers do not have to spend so much on alleviating pensioner poverty.”
She has called on the FCA to urgently introduce the Regulations legislated for in the 2017 Financial Guidance and Claims Act, that would require pension providers to help ensure all customers take advantage of PensionWise guidance before transferring.
Ms Altmann also said how the current legal and regulatory approach prioritises the speed of transfer over pension protection, leaving pensions providers powerless to stop scams.
She said: “Pension providers are on the front-line to protect against scams – if they didn’t transfer the money, customers would not lose out but they can’t legally hold up the transfer. Unless Pension providers are able to help prevent more scams, the dangers will continue to grow.”