Work and Pensions Committee to investigate pension scams in first strand of three-part inquiry

The Work and Pensions Committee is to investigate pensions scams in the first strand of a three-part inquiry into the impact of the pension freedoms and the protection of pension savers.

The pensions freedoms were introduced in 2015 with the aim of giving people aged over 55 more control over how and when they could access their savings. The broad inquiry will look at how such people are protected as they move from saving for retirement to using their pension savings. After an initial focus on pension scams, the inquiry will move onto looking at accessing pension savings and saving for later life, with a call for evidence likely next year.

The Financial Conduct Authority (FCA) and The Pensions Regulator say that 180 people reported to Action Fraud that they had been the victim of a pension scam in 2018, losing on average £82,000 each. They also believe that only a minority of pension scams are ever reported.

Chair of the Work and Pensions Committee Stephen Timms said: “The government’s shake-up of the pensions system of five years ago will have brought new freedoms for people to plan financially for their futures. But on the flip side, more flexibility means more potential for the unscrupulous to take advantage and scam savers out of what will very often be their largest financial asset, crippling their dreams of a comfortable retirement. Extra financial hardship brought about by the coronavirus pandemic also provides an added opportunity for tricksters to prey on those people who may be looking to use their pension savings as a form of support.

“We know reported frauds could be just the tip of the iceberg, so the Committee is keen to better understand the scale of the pension scam problem, as well as the types of scams in operation and the role of the pensions industry and public bodies in using current powers against fraudsters. We also want to know what more can be done to prevent such scams, to halt the huge and devastating impact they have on those looking for security in later life.”

The inquiry is currently accepting evidence and the deadline for submissions is 9 September 2020.

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