New measures to protect pension savers from fraud have been announced by Swansea West MP Torsten Bell, in his role as the UK Government’s Pensions Minister.
The plans aim to stop fraudsters tricking savers into transferring their retirement pots into bogus schemes — a con that often leaves victims with no way to recover their money.
Bell, who is the Labour MP for Swansea West and Minister for Pensions at the Department for Work and Pensions, said scams could “rip away not just people’s savings, but the retirement they are looking forward to”.
The proposals focus on a type of pension known as a Small Self-Administered Scheme, or SSAS — a kind of workplace pension typically used by small businesses, which the government says is increasingly being misused by fraudsters.
Under the plans, where there is no clear link between a saver and the scheme they are transferring into, a new warning flag would be triggered — allowing the transfer to be stopped before the money is lost.
The government says the average loss to victims of this type of fraud has risen to £38,400 per person.
“This government is determined to stay one step ahead of criminals who seek to exploit savers,” Bell said.
“Too often we see fraudsters trying to trick workers into transferring their savings into bogus pensions. We are stepping in to automatically block transfers where the warning signs are flashing red.”
Pensions are a matter reserved to the UK Government, meaning the rules would apply across Wales and the rest of the country.
The announcement is the first step in what the government describes as a wider programme to tackle pension fraud, with further measures — including possible new legislation — being developed this year.
The work is being carried out with the Pension Scams Action Group, a body led by The Pensions Regulator that brings together the DWP, law enforcement and the pensions industry.
Gaucho Rasmussen, an executive director at The Pensions Regulator, said on behalf of the group that “fraud wrecks lives”, and described the proposed safeguard as “an important step forward in protecting savers”.
The proposals also seek views on cutting red tape that has slowed down legitimate transfers, to make the process simpler for savers who are not at risk.
A consultation on the changes is now open, giving pension scheme trustees, members, administrators and industry professionals the chance to have their say.
