UK pension scam losses hit record high in March

Losses from pension scams climbed to a record high of £8m in March, weeks before the UK government shelved measures to protect elderly savers from fraudsters.

Figures released by the City of London police showed that £8.6m in losses were reported by 24 victims of pension fraud in March, a sharp increase on the £779,000 reported by 12 individuals the month before.

In total, more than £42m has been lost to “pension liberation fraud” since April 2014, when radical changes to pension rules where announced by George Osborne, the former chancellor.

Victims of “liberation fraud” are typically conned into placing their pension funds in investments that do not exist, are illiquid or incapable of delivering the promised returns.

Victims are also usually not warned about the tax charges for “liberating” their pension funds before age 55, which can wipe out half the value of the retirement pot.

“The rise is shocking,” said Darren Cooke, a chartered financial planner at Red Circle Financial Planning.

Mr Cooke added that the number of victims and losses are “likely to be significantly higher” than those reported to police. Scam victims are often too embarrassed to admit they have been fooled, or slow to realise they have been taken advantage of.

“This is likely to be the tip of the iceberg,” he said.

According to the City of London police data provided to the Financial Times, £13m in losses were reported from March 2015 to March 2016. This contrasts with £19m in reported losses the year before.

But the £8m reported in March this year was the highest monthly loss since May 2015, when reported fraud peaked at £4.9m.

Mr Cooke — who launched a petition that led to the government announcing it would ban “cold calling” in relation to pensions — said the sharp rise in reported losses in March was likely due to scammers “ramping up” their activities following publicity of the government’s plans.

Cold calling is a recognised tactic used by fraudsters to make contact with victims, typically elderly pensioners.

Last November, the government said a cold-calling ban would “cut off a key source of pension scams” while significantly simplifying the anti-fraud message to the general public.

However, the government’s response to a consultation on the proposed ban, which closed in February, was delayed last month after UK prime minister Theresa May called for a snap general election.

“The ban on cold-calling, which has been put on hold by the election, should be a high priority for the next government; the sooner it can be brought in, the better,” said Tom McPhail, head of policy with Hargreaves Lansdown.

“Thieves and fraudsters will continue to target the pension funds of the vulnerable and unwary,” he added. “Individuals should always be vigilant but the government has an important role to play too.”

A government spokesperson said on Friday that legislation had not been delayed, but it would be for the next government to respond to the consultation on pension scam prevention.

“Pension freedoms give savers a choice over how they use their hard-earned savings, but it is important that people are aware of the risks of fraud,” said a spokesperson for the Department for Work and Pensions. “The Pensions Advisory Service and Pension Wise both provide free, impartial guidance to consumers so they can fully understand the options available to them.”