The flexibility following the pensions reforms has introduced new opportunities for organised criminals to access clients’ money, writes Nucleus pensions technical manager Jon Gwinnett.

    “Hello Is that Mr Smith?

    Yes, who’s calling?

    It’s about your pension; you know you can get free advice right?

    No, really?

    Yes, just send us your details, and we’ll carry out a free pension review…”

    Sounds innocuous enough, yes? But in reality this type of cold call is the access point for fraudsters to attack pension wealth. The advent of ‘pensions freedom’ has seen a change of emphasis from the fraudsters, moving away from just creating fake or illegitimate transfer vehicles, into provoking irrevocable drawdown of pension monies that are then ‘invested’ never to be seen again. Getting information on pension holdings is a first step, before luring the consumer into ‘investing’ their money in the scammers’ products.

    Dire warnings over poor performance, rip off charges and so forth, particularly for those in legacy occupational schemes, are used as a stick and a smoke screen to blind the unsuspecting to the fraud being perpetuated. The carrot is almost always high investment returns, often ‘guaranteed’ when in reality they are unregulated, unrealistic, or simply unobtainable. Whereas legitimate providers must be clear fair and not misleading, the same cannot be said of the fraudsters, who use any and every means available to trick the unwary.

    There’s nothing new in such investment scams of course, but the pool of newly enabled pensioners, who can access a greater proportion of their investment, has made this group an appealing target for the fraudsters.

    And the transfer frauds have not disappeared. Although new scheme registrations have reduced, the popularity of small self-administered schemes, often with only very tenuous employment relationships with the sponsoring company, continue to pose challenges for the pension industry.

    However, recent rulings from the Pensions Ombudsman have shown that the risks lie with consumers, who can force a transfer in many circumstances, even where that goes against advice they have received. The results often make unhappy reading, with funds disappearing into black holes.

    Everyone, from the pensions minister Ros Altman, to the Pensions Regulator, ActionFraud and individual providers, are aware of the risks. But the new pension freedoms make it difficult, if not impossible, for firms to protect clients against such fraud. Even when following the FCA’s second line of defence model, asking if someone is aware of the risks of fraud, may not be enough to prevent them falling victim. So what can people do to protect themselves?

    Keeping clients aware of the risks, using the ‘scorpion’ branded literature available from the Pensions Regulator, and continued vigilance by advisers and providers, are ways we, as an industry can help protect individuals against the fraudsters lurking in the margins.

    And individuals themselves? They should follow the golden rules to protect against pension fraud:

    • Never give information to any cold caller
    • Never be rushed into anything
    • Speak to a trusted, FCA registered adviser before agreeing to any pension transfer
    • Check any company approaching you is registered with the Financial Conduct Authority at
    • And check the names of known investment scams at
    • Scamproof yourself using the advice of the Pensions Regulator

    Download our fraud awareness documents and keep you and your clients safe:

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