Pensions minister Torsten Bell was speaking at the Pensions Management Institute’s annual conference today (10 June)
The growth of defined contribution (DC) pension pots and consolidation in the sector will lead to an increased risk of pension fraud, pensions minister Torsten Bell says.
Speaking today (10 June) at the Pensions Management Institute's (PMI's) annual conference, Bell warned that growth in the DC sector and the push towards consolidation would lead to increased attention in pensions from cybercriminals.
The minister noted the average size of a typical occupational DC pot in 2019 was £4,000, which has grown to £8,000 today.
He said that, as this number grows over time, it will change how people view pensions – noting this will have positive effects, as it will prompt people to assess how they use their DC savings in decumulation, but also warning that it will lead to criminals "paying a lot more attention to pensions".
Bell said: "We should all be expecting pension fraud risk in the DC sector to rise as the incentive to defraud people increases. We've all got to take it seriously and should not be waiting for it to happen."
The minister noted the government had yesterday published its long-awaited consultation on proposed changes to the pension transfer regulations – the first stage in a broader programme of work the Department for Work and Pensions is conducting relating to pension scams and pension transfers.
Bell said that, as part of these changes, the government will ensure that, when people are trying to transfer into a scheme where they have "no employment link", the government will aim to ensure that it is not "waving those transfers" through and then "trying to pick up the pieces afterwards".
He said: "We are seeing people taking new approaches to trying to bring increased pension fraud, and those of us who want faith in the system need to get ahead of that and make sure that we don't see that happening."
Bell added that looking ahead to 2040 and beyond, where there could be 15 "big" DC providers, the reputations of these providers, the evidence of how the pensions system is operating in the interests of savers, and the fraud risks are being addressed will be "really important" to maintain saver trust in the system, as trust in the system is "currently too low".
