With the recent changes to pensions giving people greater freedom of choice, with that comes the need to be more diligent than ever.
In recent years pension scamming has increased, with recent figures revealed by City of London police showing that a staggering £9.1 million worth of scams have been reported between April and August 2015 alone. This means fraudsters have managed to more than £9 million from savers in the five months since April when the freedoms were introduced – twice the sum taken in the same period last year.
By contrast, the average monthly loss for the 12 months prior to August this year was £1.3 million, while the two-year average is around £1.1 million.
John Lawson, Head of Financial Research at Aviva said: “These scammers are still probably calling in even great numbers, but I think what you will see coming through longer term is that people might take two or three years to notice they’ve been ripped off.
“People are falling for it in larger numbers and investing in hotels and car parks and holiday home developments that don’t exist and they just don’t know it yet.”
The Citizens Advice Bureau (CAB) warned in August that scammers were increasingly luring innocent savers into fake investments.
The Bureau recently carried out a survey of 460 local CAB managers, volunteers, staff and Pension Wise guiders and the results showed that half of staff questioned said scammers were increasingly targeting cash lump sums with dubious investment offers. Around 40% of those surveyed had spoken to individuals who had been repeatedly targeted by scammers.
It was reported in September 2013 that the total number of scams notified was 124 and losses incurred stood at £1,587,916.37. However compared to August 2015, the sum total reported was down to 50, but the total losses amounted to £1,171,968.00. So whilst there was a significant drop in scams reported, the amount of money swindled remains high. Are you surprised by these results?
A recent case highlighted a scam whereby The Pensions Regulator (TPR) intervened when it came to light that 242 members from 17 separate pension schemes had lost around £13.7 million to a fraudulent pension retirement scheme.
In a final notice published on 12th October TPR found that the three trustees of the scheme – Alan Barratt, Susan Dalton and Julian Hanson – acting on the instructions of David Austin, misappropriated scheme funds.
The Regulator also found evidence intimating Barratt and Dalton received “large sums of money” into their personal accounts, which included cheques worth £37,000 paid directly to Dalton from the Regency Pension Investment scheme and £10,000 to Barratt from the Callahan Consulting scheme.
In addition, both trustees received commissions in breach of their fiduciary duty, not to profit from the trust. Documents obtained for both trustees appear to show entitlement to 20% commission of the profit made by Select Pension Investment.
Dalriada, the independent trustees provider, and the Pensions Regulator discovered “highly suspicious” payments, including £4 million paid to the Friends Investment Company. This particular case amounts to a staggering sum which highlights the need for more stringent regulations.
TPR says Dalriada has managed to reclaim £400,000 so far but “for many hundreds of members, hard-earned savings have most likely been lost” – not the outcome those duped would have wanted to hear.
TPR Executive Director, Andrew Warwick-Thompson, says: “This complex case bears many of the hallmarks of a pension scam and should be seen as another reminder of why savers must remain vigilant against the threat of scams, which have a devastating impact on people’s lives.
“Our appointment of an independent trustee has helped secure approximately £400,000 from the schemes, however for many hundreds members, hard-earned savings have most likely been lost.
“Our message is clear: if you’re cold-called or texted by people claiming they can help you to get early access to the cash in your pension or unusually high investment returns, stop, don’t be tempted, and put the phone down. You’re likely to lose all your money and may face a considerable tax charge.”
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