The Insolvency Service has wound up 24 companies involved in pension fraud since 2015, representing 3,750 individuals and £202 million of contributions.
Victims of pension scams last year lost an average of £91,000 each to fraudsters, new figures show.
Overall, since 2015, the Insolvency Service has wound up 24 companies involved in pension fraud, representing 3,750 victims and £202 million of contributions. In April that year, the pension freedoms were introduced, giving pension savers unfettered access to their pots. This led to a spike in pension scams, as fraudsters attempted to capitalise on pensions becoming more flexible and easier to access.
In theory, pension scams will become less commonplace, thanks to the government’s implementation of a ban on cold-calling relating to pensions earlier this month. This means in effect that any phone-call that you receive from an unknown person or company, where they ask about your pension, is an illegal call.
The Treasury says that firms that breach the rules will face fines of up to £500,000.
Although the ban is a welcome one, it is worth pointing out that pension scam phone-calls will not stop entirely, as there are exemptions to the new law (for instance, calls from FCA-authorised firms are not banned); moreover, those calls that originate from abroad are outside the UK authority’s reach and will still inevitably continue.
Tom Selby, senior analyst at AJ Bell, says: “It is horrifying that thousands of retirement savers have fallen victim to cruel retirement scams in recent years. Although it is good news a number of the companies involved have now been wound up, this is likely to be the tip of the iceberg when it comes to pension fraud.
“The government has made a start in tackling pension fraud by banning cold-calling. However, these latest figures are just another reminder of the tragic cost of retirement scams, and the protection of savers must remain front-and-centre for policymakers both in Whitehall and at regulators.”