The Works & Pensions Committee has ordered a wide-ranging inquiry into pension freedoms and the increasing number of scams arising from them.
Split into three stages, the inquiry will investigate the level of protection in place for savers moving their money out of their existing scheme and looking for somewhere else to invest.
It will take a close look at the number of scams which have already robbed thousands of savers of millions of pounds.
It will then move on to the way pension savings are accessed and saving for the length of retirements.
Finance writer Amy Austin said: “Pension freedoms were introduced in 2015 with the aim of giving people aged over 55 more control over how and when they can access their savings.
“But due to this level of flexibility scams have boomed, leading the former chief executive of the Financial Conduct Authority (FCA) to admit earlier this year the regulator has been playing catch up since the reforms.
“The coronavirus pandemic and ongoing financial hardship as a result of lockdown have provided an extra opportunity for fraudsters to target vulnerable savers and those looking to their pensions to provide additional financial support.”
To gather the information they need they have asked firms across the industry a series of questions:
- What is the prevalence of pension scams?
- What are the current trends in pension scams?
- What are the common outcomes of pension scams for perpetrators and victims?
- How are existing enforcement tools being used?
- What more can be done to prevent pension scammers operating?
- What more can be done to prevent individuals becoming victims of pension scams?
- What role should the pensions industry have in preventing scams?
- Is HMRC’s position on the tax treatment of pension scam victims correct?
- Are public bodies co-ordinating the response to pension scams?
Tip of the iceberg
Chairman of the Works & Pensions Committee, Stephen Timms, said: “We know reported frauds could be just the tip of the iceberg, so the committee is keen to better understand the scale of the pension scam problem, as well as the types of scams in operation and the role of the pensions industry and public bodies in using current powers against fraudsters.
“We also want to know what more can be done to prevent such scams, to halt the huge and devastating impact they have on those looking for security in later life.”
A festering sore
The campaigning pressure group Transparency Task Force had previously asked the committee to instigate the inquiry and its founder, Andy Agathangelou, founder of Transparency Task Force, said: “The pension scams pandemic that is blighting so many pension savers in the UK, is a festering sore on the face of the pensions industry that desperately needs treating.
“The WPC is uniquely placed to make serious headway in an area that has challenged the authorities and regulators for many years.
“Without a doubt, today’s news gives pension scam victims hope: hope that reforms will be made to make it hard for innocent people to have their pension savings stolen from them; hope that callous criminals will be brought to justice; and hope that all the authorities can become properly aligned and form a united front to defend the Great British public.”