25th October 2016
Fraud losses in the period following the introduction of pension freedoms could be a quarter higher than initial estimates, analysis of City of London Police statistics suggests.
Previously, it was thought some £10.6m of pension fraud losses had been reported to City of London Police in the six months following the introduction of the pension freedoms in April 2015.
However, updated statistics obtained by investment platform AJ Bell reveal the figure has been revised up to £13.3m – 25% higher than the original estimate. The reason for the new, higher figure is that victims often update their reports to reflect the full amounts lost.
It means the year-on-year spike in fraud reports was actually 146%, from £5.4m in the corresponding period in 2014.
Source: City of London Police
The revision means the total pension fraud losses recorded by City of London Police has passed the £40m mark since it started tracking the data in May 2013.
While this is only shows reported losses and does not cover frauds that occurs when money is moved out of a pension scheme and into an investment vehicle, it gives an indication of the extent to which people continue to be targeted by scammers.
A petition calling for the Government to ban pensions cold calling as part of a wider drive to clamp down on pension fraud has so far attracted almost 2,000 signatures.
AJ Bell senior analyst Tom Selby says: “Judging by this data, the post-freedoms pension fraud spike was worse than we had previously feared, and yet the Government continues to sit on its hands when it comes to taking meaningful action to deter scammers.
“A broad coalition of observers, from former pensions minister Baroness Ros Altmann to advisers and providers, agree banning cold calling could make a real difference in the fight against pension fraud.
“More than £40m of pension fraud losses have been reported to City of London Police since May 2013, while estimates of total losses UK-wide from pension-related fraud – including investments – run into the hundreds of millions. This does untold damage to both the victims whose long-term savings are decimated, and to the reputation of pensions as a whole.
“Prime Minister Theresa May has indicated an appetite for intervention in various markets – she should start by strengthening the Government’s response to the threat of pension scams.”