TPR needs back up from other parties to really get to grips with pension fraud says Helen Morrissey.
The issue of pension fraud has been intensified by the advent of pension freedoms. The ability to take your pension as a lump sum and invest it elsewhere has proven fertile ground for con artists looking to relieve pension savers of their cash. What makes it worse is that once the money has been taken the victim will then get a bill from HMRC for the tax they incurred by taking their pension as a lump sum.
I don't have any dispute with HMRC on this. If you take your money as a cash lump sum then you pay tax on it - that is fair enough. However, is there more we can do to ensure people know what pension fraud looks like and the potential tax implications in advance?
The Pensions Regulator (TPR) has done much to raise awareness of pension scams and occupational pension scheme trustees have also played an important role. However, post pension freedoms from the age of 55 people are now enabled to take their money and so the traditional warning bells may not sound. Scheme members are also under no obligation to tell trustees or their provider what they intend to do with the money.
Is there more we can do to ensure people know what pension fraud looks like and the potential tax implications in advance?
We need a more co-ordinated approach to pension scam prevention. TPR should be joined by HMRC, industry bodies and providers to ensure the information gets out to as many people as possible that falling victim to pension liberation leaves you doubly out of pocket as you will also get hit with a tax bill.
Of course this will not be enough to help those accessing their pension because they are desperate due to debt, for instance. Those people need the money and are unlikely to be deterred by warnings. However, for those who are likely to be seduced by the lure of massive returns, a few timely reminders of the hallmarks of a pension scam and the likely financial fallout could be enough to make them think twice.
The Pensions Regulator (TPR) has substantially increased the usage of its powers against trustees – posting a sharp rise in the use of formal information gathering powers and High Court production orders during the three months to the end of September....
The Pension Schemes Bill has completed its third reading, crossing its latest hurdle in the House of Commons.
An amendment to the Pensions Schemes Bill which would have seen people given a pre-booked Pension Wise appointment ahead of accessing their retirement savings has been defeated.
A proposal to ensure savers receive a Pension Wise appointment prior to accessing their retirement pot has received cross-party support in parliament, while Labour seeks net-zero pensions by 2050.
Pension scams are not just about the money lost, but the lives devastated, says Nicola Parish, so the industry must unite to defeat this scourge.