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10 Dec 2020
by Simon Lewis

How to protect employees from pensions scams

My life in pension schemes thus far has included dealing with insolvent employers, managing a pensions administration operation and being a volunteer adviser for the Pension Ombudsman. This means I’ve seen at close quarters how losing your workplace pension can be devastating. Often, the position is irrecoverable. Being involved in a pensions scam damages your emotional state and heightens stress, whether or not you ultimately lose money.


The financial pressure of pending redundancy, living on furlough or salary cuts will have increased some employees’ susceptibility to access their pensions illegally to help make ends meet. Fraudsters are seeking to take advantage of this through increasingly sophisticated scamming.

Broad estimations find that up to £10 billion has been lost to date due to pensions scams, affecting c40,000 pension scheme members. And at least 5% of transfers out of pension schemes now show serious scam warning signs, according to the Pensions Scams Industry Group, (October 2020).

Pension scams typically cover unsolicited contact from fraudsters to transfer your pension benefits elsewhere for early access and/or receive an increased lump sum. Cold calls (now subject to legal sanctions), emails and, increasingly, contact via social media all purport to be from legitimate schemes or firms. ‘Pensions review’ and cloned websites are two further growing areas of deceit in the past 12 months.  

Having the confidence to identify a scammer and say ‘no’ is key. There is a collective responsibility between employees themselves, regulators and the wider pensions industry to ensure pension scams are avoided. However, employers can also take steps to help protect and educate employees from being scammed.

Here are five tips for employers to help combat against fraudsters and protect their employees:

1. Dictate the narrative

I’ve seen regulated, but inappropriate, independent financial advisers (IFAs) being commonly used by pension scheme members due to be being ‘recommended by a colleague’. To counter this, ensure there is a flow of articles and awareness via your company intranet/team talk/townhall sessions. Ideally, you’ll already have some wider financial awareness support in place. If so, make this topic part of that learning. There’s a wealth or free communications material available on pension scams you can make use of.

2. Direct the flow of traffic

Link-in with a reputable IFA. More and more companies (or their pension trustees) are forming contractual relationships with an IFA, or panel of IFAs, to assist employees. This gives a clear line of oversight and promotion of quality IFAs reduces exposure to dodgy ones.

3. Provide and promote access to automated benefit modellers

Many pensions providers offer them as standard. This will allow employees to see what pension benefits they may be giving up by transferring out and end contact with fraudsters at stage one. This can offer good protection against members opting out of their defined benefit (DB) scheme just to get a quotation to share with a fraudulent pensions review company or dodgy IFA who may not have your employee’s best interests at heart.

4. Question your pension scheme administrators

  • How do they comply with best practice (see Project Bloom below)?
  • What controls do they have in place to support employees who are members of your pension schemes?
  • What training do they have and how is this kept up to date?

5. Be part of the anti-scam community

  • Project Bloom – this is a multiparty ongoing initiative led by The Pensions Regulator, which is targeting fraudsters directly with the force of criminal law behind it. Ask your administrators to join the Regulator’s pledge to defeat the fraudsters, this is something we are actively looking at right now. There is also a new pension scams trustee toolkit released to complete.
  • Pensions Scams Industry Group – this cross-industry working group will help gather clear evidence, share and improve best practice and coordinate campaigns. Ensure representation by your pensions provider/administrator or a member of your in-house pensions team.
  • Action Fraud – encourage and participate in reporting actual or suspected fraud to a central fraud register. Tell your employees directly if you have concerns.

Many of these are quick and easy to achieve at little or no cost, so do them straightaway to help your employees. Others might take a bit of planning and investment of time and may depend on the size and make up of your workforce. Anything that helps stop your employees from losing one of their biggest savings pots is important. Others connected to the issue are stepping up, but employers can help make a big difference too.

The author is Simon Lewis, client director at Punter Southall Governance Services.

This article is provided by Punter Southall Governance Services.

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