22nd June 2020
The Pensions Regulator (TPR) has reiterated its warnings about scams after recent figures from Action Fraud show that over £5.3m has been lost to coronavirus-related scams since February 2020, with pension scams being among the most common type of fraud.
In light of the announcement, Jonathan Watts-Lay, Director at WEALTH at work, comments on how Trustees can help protect their scheme members from becoming a victim of pension fraud;
“Scams have been on the rise for many years and increased significantly following the introduction of freedom and choice.
However, as the figures from Action Fraud show, the situation is getting worse due to the impact COVID-19 has had on global market volatility and the fact that many household incomes are under extreme pressure.
While the regulators are already aware of this and are putting measures in place, there is still a long way to go. Trustees are the first line of defence in protecting retirement funds and the industry is expecting them to step up to the task.
Providing financial education and guidance to members at retirement can help to ensure members understand their options and the risks involved, which will help them make informed decisions and avoid costly mistakes. It can also help members decide if they need further support such as regulated financial advice, which is also being encouraged by the regulator.
While it is well-known that many Trustees have concerns over helping members gain access to advice, simply referring members to a list of advisers to choose from can lead to significantly poor member outcomes. If done correctly, facilitating access to regulated financial advice does not carry the risk many presume.
Introducing an adviser to a scheme should be arranged after a thorough due diligence process which includes sourcing a reputable firm and checking their regulatory record, checking they have a robust compliance process, speaking to other schemes using their services, looking at member feedback and requesting a breakdown of costs to ensure they are competitive.”
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