New law aims to protect retirement savers from fraudsters

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    Fraudsters often offer retirement savers “too good to be true” incentives such as free pension reviews, early access to retirement funds, or other limited-time offers. Lured by these bogus offers, savers are then tricked into transferring their savings to a fraud system in order to defraud their money. Between January and May 2021, Action Fraud reported losses from pension fraud totaling over £ 2.2 million.

    Pensioners themselves are not allowed to refuse a transfer if the saver is entitled to do so – not even if they are suspected. However, this will change from November 30th when the government’s new rules come into effect. From this date, trustees and system managers can:

    • Prevent broadcast requests when suspicious activity is suspected by setting a “red flag”. If there is a red flag, the transfer cannot be performed. We asked the government if savers can appeal this decision and will update this story when we know more.

    • Interrupt transfer requests if fraud is suspected by marking them with a “yellow flag”. In this scenario, the retirement saver must prove that they received fraudulent specific guidance from the free money and retirement service before the transfer can be made. This is the only way to make a transfer.

    A red flag can occur if the trustees and system managers discover that financial advice has been given without government authorization, if the retirement saver has been contacted by an unsolicited person, or if they have been pressured to complete the transfer quickly. Suspected fraud could also include concerns about the destination of the transfer or if the retirement saver does not know how their transferred money is being invested.

    The government adds that it will review the new regulations within 18 months to make sure they are effective. Pension Minister Guy Opperman said: “We are practically fighting the scourge of pension fraud to protect retirees’ hard-earned savings.”

    In our retirement provision guide you will find everything you need to know about retirement provision.



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