XPS scam warning on £73m of pension savings

XPS Pensions Group has uncovered a surge in the number of ‘red flags’ being reported on pension transfers, indicating warning signs of scam activity, from 13% in June 2018 to 34% in June 2019. The rise represented £73m of member’s pension savings that were at risk over the past 12 months. XPS says the increased reporting of ‘red flags’ showed that scam awareness was improving. June 2018’s revision to the PSIG Code of Good Practice encouraged direct interaction with members to help identify some of the key ‘red flags’ for potential scams. It also introduced a greater focus on assessing members’ awareness of the fees and charges related to their proposed transfer. XPS says talking directly to a member about their transfer increases the likelihood of discovering ‘red flags’ and some of those identified were: • Lack of awareness around fees • Confusion around the IFA process • Misunderstanding the transfer processMost cases with a red flag do not turn out to be scams but an increased recognition of warning signs is a positive step forward, the firm says. XPS says a further revision to the Code of Good Practice on Combating Pension Scams, published this week, will continue to help the Industry tackle this ever evolving threat. The company says it is “important that trustees and employers continue to help members understand both their benefits and their options. “All too often it is a lack of understanding that creates opportunities for scammers.” The ban on pensions cold calling earlier this year, tougher rules to stop scammers opening fraudulent pension schemes and a number of successful criminal convictions have been cited by the pensions industry as key developments in protecting people from pension scams. But XPS says this is “just the start” and the industry has “a duty to continue to raise scam awareness and encourage communication between members and their schemes”. Wayne Segers, principal, XPS Pensions Group, said: “Over the last year we have seen a big increase in the number of warning signs being identified for potential scam activity on pension transfers, from one-in-eight in June 2018 to one-in-three in June 2019. “Fortunately, not all turn out to be scams but it is good to see an increased understanding of the warning signs. “Our Scam Identification team identified the red flag warnings by speaking directly to members, which is a key part of the data gathering process.” In the last twelve months to 31 May 2019, XPS’s Scam Identification team have handled 969 member transfer cases, representing transfer values totalling £214,000,000. Mr Segers added: “Pension schemes need a system to identify scam activity, such as our specialist telephone service, however it is also important that schemes help their members better understand their pension entitlements and the fees that they could expect to incur. “This will reduce the opportunities for scammers to trick them.” Margaret Snowdon OBE, chair of PSIG, said: “The risk of pension scheme members being scammed increases as they are faced with more choice and the current laws do not help to protect them, in fact they cause further confusion. “On average, members lose £91,000 of their pension savings through scams which can have a devastating impact on their later life. “The revised Code of Good Practice published this week is another big step towards helping protect members, but they also need help to help themselves. “An excellent way to reach them and help prevent the loss of further pension savings to scams is to talk to them directly about their transfers, as the scammers do. “Scam Awareness Fortnight is a great opportunity to reach out to all members of pension schemes to make them aware of the very real risks from the criminals looking to steal their pension savings.”

XPS scam warning on £73m of pension savings

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