Chancellor Philip Hammond announced a consultation to decide whether to ban pension cold calling. The move, announced in the Autumn Statement, is an aim to crack down on scammers who call vulnerable older people in an attempt to defraud them.
It’s likely we’ll see the consultation launched before Christmas. There’s no guarantee of the results of this but it’s likely that companies will have different options on how to tackle pension scams. Let’s take a look at what this could mean for you.
What are pension scams?
Pension scams have been on the rise over the last year, since previous Chancellor George Osborne launched Pension Freedoms in April 2015. Pension Freedoms means that people over the age of 55 can withdraw as much of their pension fund as they want, and 25% of this will be tax-free. They can then reinvest this in a scheme, save it or spend it on whatever they wish.
Because of these Pension Freedoms, scammers have taken the opportunity to try and exploit older people. They call them and offer them a great-sounding investment deal – only it doesn’t actually exist. When the unwitting victim hands over their cash, the criminals take it. You can read more about how to spot a pension scam in our blog.
What’s set to change?
According to the proposals, pension companies could have greater powers to block transfers to schemes that seem suspicious. If the pension provider thinks there might be cause for concern, they wouldn’t transfer the pension fund.
The plans could also block calls from pension companies that you’ve not previously had any dealings with. This is similar to how calls from mortgage providers work. Of course, this doesn’t mean that anyone who calls you or an elderly relative about a pension is a fraudster. It can just be difficult for some vulnerable older people to tell whether the person on the other end of the phone is genuine or if they’re a scammer.
When will we hear?
The consultation on beating pension scammers could start before Christmas but it will be a while before we hear any results from this. It’s likely the Chancellor will use his 2017 Budget speech to announce any decisions that come out of it – this will be in spring.
So how can you stop your older relatives from falling victim to pension fraudsters in the meantime? Our blog on protecting yourself from pension investment scams can help you know what to look out for and what to avoid.