UK pension scams under scrutiny after 2015 relaxation in rules

UK pension scams under scrutiny after 2015 relaxation in rules

LONDON (Reuters) – British lawmakers said on Tuesday they were launching an inquiry into pension scams following a relaxation in pension rules five years ago that has increased the scope for fraud, a problem likely to get worse during the coronavirus pandemic.

Under so-called pension freedoms introduced in 2015, over-55s have been able to choose how they spend their pension pots, rather than being forced to buy an annuity, which gives a fixed income for life.

Industry sources say the changes have encouraged investment in other financial products that offer higher returns than annuities, but have also increased the scope for scams.

“More flexibility means more potential for the unscrupulous to take advantage and scam savers out of what will very often be their largest financial asset, crippling their dreams of a comfortable retirement,” said Stephen Timms, chair of the work and pensions committee of lawmakers.

Some 180 people reported they had been the victim of a pension scam in 2018, losing on average 82,000 pounds ($106,000) each. Regulators believe only a minority of pension scams are reported, the committee said in a statement.

The coronavirus pandemic is likely to lead to a further increase in scams, said Andy Agathangelou, founder of Transparency Task Force, which lobbies for reform of financial services.

“People are suffering from lack of money, there’s an increasing lack of confidence in the pensions industry and scammers are getting ever more sophisticated.”

The work and pensions committee is seeking written submissions on pension scams by Sept. 9.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

XL subscribe to our newsletter banner

Get the latest news and advice on COVID-19, direct from the experts in your inbox. Join hundreds of thousands who trust experts by subscribing to our newsletter.

Send your news and stories to us news@climaxradio.co.uk or newstories@climaxnewsroom.com and WhatsApp: +447747873668.

Before you go...

Democratic norms are being stress-tested all over the world, and the past few years have thrown up all kinds of questions we didn't know needed clarifying – how long is too long for a parliamentary prorogation? How far should politicians be allowed to intervene in court cases? To monitor these issues as closely as we have in the past we need your support, so please consider donating to The Climax News Room.