A ban on cold-calling by pension companies will include texts and emails, the government has announced, as it cracks down on scammers who target savers’ retirement funds.
Almost £5m was lost to fraudsters in the first five months of 2017, said the government, and it was estimated that since April 2014 a total of £43m had been taken. People targeted by scammers lost an average of £15,000 each.
Typically, fraudsters contact savers and offer low-risk investments with high returns, persuading them to transfer their money from their pension accounts into fake schemes. When new rules allowing people access to their funds were introduced in April 2015, there were warnings that this could prove costly to consumers unable to distinguish between scam calls and marketing by genuine firms.
The cold-calling ban will prevent all cold calls, emails and texts about pensions, and will be enforced by the Information Commissioner’s Office. The ICO has powers to fine companies up to £500,000 if they break its rules, although it can only take action against companies based in Britain. There will be two exemptions to ensure legitimate calls are not affected – companies will still be able to contact consumers who have expressly requested information from them, and will still be allowed to make marketing calls to existing clients.
Along with the ban, there will also be new rules to make sure that only active pension schemes with up-to-date accounts can register with HMRC. While the rules on registration will form part of the finance bill, the cold-calling ban will need separate parliamentary time, so it is unclear when it will come into effect.
The pensions minister, Guy Opperman, said: “If people have saved for a private pension, we want to protect them. This is the biggest life’s saving that individuals normally make over many years of hard work. By tackling these scammers, people should know that cold calling, apart from exceptional circumstances, is banned.”
The scammers have a variety of tricks to catch you out. They may claim that you can access your pension pot before age 55 . They also approach you out of the blue over the phone, via text message or in person door-to-door and entice you with upfront cash.
The Pensions Regulator’s five steps to avoid becoming a victim of a pension scam:
- Hang up! If you are Cold called about your pension hang up.
- Check the credentials of the company and any advisers – who should be registered with the Financial Conduct Authority.
- Ask for a statement showing how your pension will be paid at retirement, and question who will look after your money until then.
- Speak to an adviser that is not associated with the deal you’ve been offered, for unbiased advice.
- Never be rushed into agreeing to a pension transfer.
For more information about pension scams visit The Pensions Regulator website. Before you sign anything, call The Pensions Advisory Service on 0300 123 1047