Later this year, as part of the Pension Schemes Act 2021, the government is intending to introduce regulations that allow trustees or pension administrators to prevent transfers of pension benefits if they’re considered suspicious. This is to protect people at risk of being scammed.  

In addition, the Pension Scams Industry Group (PSIG) has updated its code of good practice on combating pension scams, by making new recommendations to trustees.

Both these developments are in response to a huge increase in reported pension fraud over the last few years. 

Action Fraud has revealed that £1.8m was lost to pension scams in the first three months of 2021 alone, and there were 107 reports of pension fraud. This is an increase of 45% on the same time in 2020.

In many cases, victims have been contacted by criminals posing as trusted professionals and have mistakenly transferred their pension benefits into a fraudulent account, losing their savings in the process.

Employers and members should be reassured to know that for some time now, the Railways Pension Scheme has already been carrying out all these new government and PSIG suggestions designed to combat pension fraud. These are:

• Telephone calls to communicate with members during the pension transfer process
• All transfers that are believed to be suspect should be reported – not just those that are refused
• Transfer information should be recorded and maintained. This should include details of when transfers were refused, or cancelled by members if concerns were raised with them.

If members of the RPS or BTPFSF request a transfer, there are many, detailed security catches, authorisation steps, and checks in place. Members must fulfil all of these, 100%, before they pass even the initial phase of the transfer process.

After this, if we still believe the transfer request to be irregular, we would hold more telephone conversations with the member.  We report all suspicious transfer attempts internally, and we record all our findings.

These steps and procedures are not taken to delay people from accessing their benefits, or processing the transfer, but carried out as a matter of course, to protect members from criminal activity and fraud.

Anyone can be at risk of fraud or scam at any time, but people are often most at risk of pension fraud when they’re close to retirement, have saved up a large amount into their pension, or they are thinking of transferring. All members should be their guard if approached out of the blue about their pensions.

It is also a legal requirement for everyone to take independent financial advice, before transferring a defined benefit (DB) pension into a defined contribution (DC) pension, if the transfer value is £30,000 or more.

Liverpool Victoria (LV) has been chosen as the official partner to give RPS and BTPFS members access to financial advice. LV can be contacted on 0800 023 4187.

Alternatively, members can choose their own Independent Financial Adviser (IFA) in their local area at unbiased.co.uk. They should always check the Financial Conduct Authority (FCA) register here, to make sure that a financial advisor is FCA-authorised.