A lot of pension scams are going unreported because many people are too ashamed to report them, The Pensions Regulator (TPR) has cautioned.
Andrew Warwick-Thompson (pictured), TPR’s executive director for regulatory policy, told attendees at the RP Forum that a major problem for the industry is it is unsure how many people are involved in scams and how much money is being lost.
“There are a variety of reasons for that,” he said. “One is that it takes a long time for people to realise they have been scammed. The other thing we’ve come across is that they’re ashamed of the fact they’ve got suckered. So we suspect a lot of scams go unreported.”
The average loss from a pension scam is £50,000, but Warwick-Thompson claimed he had seen cases involving losses of more than £100,000. People aged between 50 and 59 are most at risk of falling victim to pension scams, which have become more prevalent after pension freedom.
This mirrors findings from the Financial Conduct Authority, which last year warned of scammers targeting older investors. It said they were enticing them through the promise of high returns to invest in unregulated products such as wine, diamonds and land.
“We seem to be getting the highest number of reporting of scams from people aged between 50 and 59, which is consistent with the view that freedom and choice may well inadvertently have made them targets for scams,” Warwick-Thompson said.
He said men were more likely to be scammed than women, and women were more likely to tell their partners if they thought they had been involved in a scam.
In a blog earlier this year, Warwick-Thompson described small self-administered schemes (SSAS) as the “vehicle of choice for scammers”, which he reiterated at the RP Forum.
He said TPR was considering broadening its prosecution powers by looking into setting up its own fraud prosecution act, although he cautioned it would take a long time to come into force.
Warwick-Thompson has previously suggested the industry consider an outright ban on the establishment of any more SSAS arrangements, in addition to a ban on pension transfers to SSAS arrangements.
He argued that self-invested personal pensions (SIPPs) were a safer vehicle for consumers who want control over the investments in their pension pot.
Warwick-Thompson also called for the cold-calling ban to be extended to include cold texts and emails. Trustees and scheme managers should also be provided with a “safe scheme” list.
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