27th July 2015
Losses from pension liberation fraud increased 235% to £4.7m in May – up from £1.4m in April when savers were given greater freedom to spend their pension money as they liked, according to a Financial Times report.
The rise has “the makings of a national scandal”, Malcolm McLean senior consultant at accountancy group Barnett Waddingham has warned.
He urged that the big spike in losses reported in May “is extremely disturbing” and gives weight to the fears previously expressed by many commentators that the new pension freedoms applying from April would open the door to increased fraud activity.
McLean said: “This has all the makings of a national scandal and will serve to undermine and discredit the whole pension freedom agenda unless it is dealt with and brought under control as a matter of increasing urgency.
“Clearly the fraudsters are fully aware that many pensioners now have ready access to large capital sums and are potentially a soft target for the many and various scams that currently exist.”
In many cases the conmen start with a cold call, a text message, or an email offering a free review with the prospect of substantially increasing the value of their savings by, for example, taking advantage of the investment opportunities that they can be provided. But the results are invariably negative for the saver with some of the victims losing the whole of their savings in consequence of being duped by the fraudsters.
“As more of the figures given to the FT show, pension fraud is not new. 3,704 reports of pension liberation activity were recorded over a two-year period to May 2015 with losses totalling £25m. Average losses from pension scams during that time went up from £14,000 to £15,000. In many respects, however, misappropriation of an individual’s pension fund holdings is less difficult to perpetrate under the more flexible regime now in force and we must face up to the possibility of the scammers attempting to deprive even more unsuspecting victims of their hard earned savings in the coming months,” added mcLean.
“Against this background we must all redouble our efforts to warn the public of the risks and consequences they face in this area with the single most important message that they should never in any circumstances have any dealings with cold callers and reject any and all offers whatever they may be and however tempting they may sound.”