The Pensions Regulator (TPR) is encouraging trustees and administrators to take a more proactive stance in protecting members from pension scams, as data from the Financial Conduct Authority (FCA) reveals a significant drop in scam attempts. However, concerns persist about underreporting of scams and potential fraud victims who may be unaware of their situation.
According to recent FCA data analysis, 7% of adults received unsolicited pensions-related approaches in the previous 12 months, a sharp decrease from 16% in 2020 and 20% in 2017. This represents approximately 6.5 million fewer adults experiencing attempted scams, with the numbers falling from 10.2 million in 2017 to 3.7 million in 2022.
Despite this reduction, there is growing apprehension that many scams may be going unreported, particularly those targeting savers who may have been defrauded without their knowledge. To address this issue, TPR has recently intensified its efforts to engage administrators and trustees more actively in the fight against fraudsters.
A recent TPR blog outlined how the regulator is employing an Administrator Relationships function to interact directly with administrators, aiming to protect savers and mitigate potential risks. TPR also emphasized the responsibilities of trustees in performing certain checks when handling pension transfer requests and guiding members towards Pension Wise for impartial advice.
Broadstone, an independent consultancy firm, echoed TPR's call for increased vigilance by trustees and administrators. Gavin Giles, Head of Pensions Administration at Broadstone, highlighted the importance of excellent data protection and record-keeping, attentive member communications, and ongoing awareness campaigns as effective measures to prevent scams.
"We must keep banging the drum for administration until schemes truly recognize its return on investment at scheme level and role in helping members achieve good outcomes," Giles said.
In related news, XPS Pensions' latest scam flag index revealed a 7% drop in the rate of transfer requests that raised a scam warning in August. The index monitors monthly transfers for approximately 350 schemes reviewed by XPS's scam protection service. For the first time since May last year, less than 90% of transfers raised at least one scam warning, largely due to a higher proportion of transfers being used to purchase immediate annuities, which are considered less susceptible to scams.
Furthermore, the XPS transfer value index, which estimates the cash transfer value of a 64-year-old member with £10,000 yearly pension payments, was recorded at £159,000, reflecting reduced gilt yield volatility and more stable inflation expectations. The transfer activity index recorded a slight increase from the previous month, with 28 per 100,000 members transferring out of their current scheme.
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