Pension scam warning sign awareness increasing
17 June 2019
Pension scam warning signs are increasing, with XPS Pensions Group announcing a surge in the number of ‘red flags’ being reported on pension transfers.
The group said warning signs of scam activity jumped from 13% in June 2018 to 34% in June 2019, representing a substantial £73m of member’s pension savings.
XPS said the rise in ‘red flags’ showed that scam awareness is improving and said talking directly to members about their transfer increases the likelihood of discovering potential red flags. Through its conversations with members over the past 12 months, the pension consultancy said it had identified a lack of awareness around fees, confusion around the adviser process and a misunderstanding of the transfer process.
While most cases with a red flag don’t turn out to be scams, the increased recognition of warning signs should be seen as positive step forward, XPS said.
Wayne Segers, principle, XPS Pensions Group, commented: “Over the last year we have seen a big increase in the number of warning signs being identified for potential scam activity on pension transfers. Fortunately, not all turn out to be scams but it is good to see an increased understanding of the warning signs.
“Pension schemes need a system to identify scam activity, however it is also important that schemes help their members better understand their pension entitlements and the fees that they could expect to incur. This will reduce the opportunities for scammers to trick them.”
XPS said the ban of pensions cold calling introduced earlier this year, tougher rules to stop scammers opening fraudulent pension schemes and a number of successful of criminal convictions have been a great start to protecting people from pension scams, but called for the industry to do more to raise scam awareness and encourage communication between members and their schemes.
Margaret Snowdon, OBE, chair, PSIG, added: “The risk of pension scheme members being scammed increases as they are faced with more choice. On average, members lose £91,000 of their pension savings through scams which can have a devastating impact on their later life. An excellent way to reach them and help prevent the loss of further pension savings to scams is to talk to them directly about their transfers, as the scammers do.”
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