Work and Pensions Committee to examine impact of pension freedoms and protecting pension savers

The Work and Pensions Committee is to investigate pensions scams in the first strand of a three-part inquiry into the impact of the pension freedoms and the protection of pension savers.

The pensions freedoms were introduced in 2015 with the aim of giving people aged over 55 more control over how and when they could access their savings. The broad inquiry will look at how such people are protected as they move from saving for retirement to using their pension savings.

After an initial focus on pension scams, the inquiry will move onto looking at accessing pension savings and saving for later life, with a call for evidence likely next year.

Pension scams – background

Pension savings are often people’s single largest financial asset. The high value and fact that people often do not have to engage with their savings until much later in life makes them an attractive target for fraudsters.

The Financial Conduct Authority (FCA) and The Pensions Regulator say that 180 people reported to Action Fraud that they had been the victim of a pension scam in 2018, losing on average £82,000 each. They also believe that only a minority of pension scams are ever reported.

Last month, the Committee’s report, DWP’s response to the coronavirus outbreak, committed to undertake detailed work on pension scams.

Rt Hon Stephen Timms MP, Chair of the Work and Pensions Committee, said: “The Government’s shake-up of the pensions system of five years ago will have brought new freedoms for people to plan financially for their futures. But on the flip side, more flexibility means more potential for the unscrupulous to take advantage and scam savers out of what will very often be their largest financial asset, crippling their dreams of a comfortable retirement. Extra financial hardship brought about by the coronavirus pandemic also provides an added opportunity for tricksters to prey on those people who may be looking to use their pension savings as a form of support.

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.”

Call for written submissions

The Committee would like to hear your views on the following questions. You do not have to answer all of the questions. The deadline for submissions is Tuesday 9th September.

1. What is the prevalence of pension scams?
2. What are the current trends in pension scams?
3. What are the common outcomes of pension scams for perpetrators and victims?
4. How are existing enforcement tools being used?
5. What more can be done to prevent pension scammers operating?
6. What more can be done to prevent individuals becoming victims of pension scams?
7. What role should the pensions industry have in preventing scams?
8. Is HMRC’s position on the tax treatment of pension scam victims correct?
9. Are public bodies co-ordinating the response to pension scams?

Where to get help

If you have any concerns about an offer you’ve received, or about a conversation you’ve had about transferring or accessing your pension, you can check with The Pensions Advisory Service.

They can also give you advice if you’ve been a victim of a scam.

You can speak to a pension specialist at The Pensions Advisory Service on their helpline on 0800 011 3797 (Monday to Friday from 9am to 5pm) or use their webchat service or online enquiry form through their website at www.pensionsadvisoryservice.org.uk

If you’ve been a victim of a scam and need support:

• You can contact Victim Support or Think Jessica if a scam has made you feel anxious, fearful or guilty. They provide emotional and practical help to victims of crimes and scams.
• You can contact the 24-hour Samaritans helpline on 116 123 if you feel low or anxious and need someone to talk to.
• You can contact Citizens Advice if you’re having trouble paying your bills and are worried about what to do.

ENDS

Committee Membership: Rt Hon Stephen Timms MP (Lab, East Ham), Debbie Abrahams MP (Lab, Oldham East and Saddleworth), Shaun Bailey MP (Con, West Bromwich West), Siobhan Baillie MP (Con, Stroud), Neil Coyle MP (Lab, Bermondsey and Old Southwark), Steve McCabe MP (Lab, Selly Oak), Nigel Mills MP (Con, Amber Valley), Selaine Saxby MP (Con, North Devon), Dr Ben Spencer MP (Con, Runnymede and Weybridge), Chris Stephens MP (SNP, Glasgow South West) and Sir Desmond Swayne MP (Con, New Forest West)