Work and Pensions Committee to investigate pension scamwritten by Bella Palmer
Staggering sums have been lost after people were convinced to invest in high risk schemes
Pensions scams will be the key focus in the first part of a Work and Pensions Committee (WPC) inquiry reviewing the impact of the introduction of pension freedoms five years on.
The WPC confirmed on Tuesday (28 July) that it will investigate pension scams as part of a three-part inquiry into the protection of pension savers - the first call for input of its type.
A broad inquiry will look at whether pension freedoms have changed the way savers are protected as they move through drawdown during their retirement and use their pension savings.
The WPC has called on the industry to submit its views on the prevalence of scams and current trends. Also, what the common outcomes of pension scams for perpetrators and victims are, how existing enforcement tools are being used, and what can be done to prevent scammers operating.
Feedback is also being sought on what more can be done to protect savers from becoming victims of scams, and what role the pensions industry needs to play in preventing scams.
Accessing pension savings and saving for lately life will form the second and third parts of the inquiry, with a call for evidence "likely" in 2021.
The position of HM Revenue & Customs (HMRC) will also be considered, with the WPC's call for input also asking whether HMRC's tax treatment of pension scam victims is fair.
WPC chairman and Labour MP Stephen Timms said the flexibilities offered under the pension freedoms had given "more potential" to scams that needed reconsidering.
Extra financial hardship brought about by the coronavirus pandemic also provides an added opportunity for tricksters to prey on those people who may be looking to use their pension savings a firm of support, he said.
We know reported frauds could be just the tip of the iceberg, so the committee is keen to better understand the scale of the pension scam problem, as well as the types of scams in operation, and the role of the pensions industry and public bodies in using current powers against fraudsters, he said.
This comes after the Transparency Task Force called on MPs to conduct a deeper investigation into pension scams last month, while pensions ombudsman Anthony Arter also warned the WPC that he had serious concerns over the number of scams and the ability of The Pensions Ombudsman to sustain the subsequent workload.
Transparency Task Force founding chairman Andy Agathangelou said: Without a doubt, today's breaking news gives pension scam victims hope - hope that reforms will be made to make it hard for innocent people to have their pension saving stolen from them; hope that callous criminals will be brought to justice.
I am hopeful that Stephen Timms and his committee colleagues will harness the purposeful power of parliament to good effect, shining a big bright light onto what needs to be done to get things under control, he said.
Speaking at the inaugural meeting of the new All-Party Parliamentary Group on Pension Scams in March, former pensions minister Baroness Ros Altmann said more than £10bn may have been lost to pension scammers in the UK thus far.
Figures from ActionFraud show the number of pension-specific financial scams has skyrocketed since the Covid-19 lockdown began across the UK more than four months ago. Over 11,000 coronavirus-themed scams have been reported, along with £5.1m worth of losses.
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