Pension Scams and SSAS: The Government’s Consultation Response

28 Page Document Summarises the Outcome of the Government’s Consultation

On 21st August 2017, the Government in a combined paper from the Treasury and the Department for Work and Pensions, published it’s long overdue and much anticipated response to its Pension Scams Consultation. The 28 page document was prompted by the significant increase in Pension Scamming that has coincided with the arrival of Pension Freedoms in 2015. In this article we look at the areas that are relevant to our core area of expertise – Small Self Administered Schemes (SSAS).

Banning Cold Calling in Relation to Pensions

These are the key sections for this area in the report:

2.3 The Government intends to proceed with the proposal to legislate for a ban on cold calling in relation to pensions.

2.8 The Financial Advice Working Group is developing new terms to describe ‘Advice’ and ‘Guidance’ to help consumers understand what financial advice can offer them.

2.25 The Government intends to extend the ban on cold calling to all electronic communications about pensions.

2.33 The Government does not intend to impose criminal sanctions and custodial sentences on those in breach of the ban on cold calling, the reason being that introducing a ban, without criminalising breaches, will allow the Information Commissioners’ Office to take action immediately without having to consider the caller’s intent.

2.37 The ICO has no power to take action against firms located overseas, unless the calls are made on behalf of a UK company.

2.42 Next Steps. “The government intends to work on the final and complex details of the ban on cold calling in relation to pensions during the course of this year. This will ensure that we get draft legislation to ban cold calling in relation to pensions right. The government will bring forward legislation when Parliamentary time allows.”

Limiting the Statutory Right to Transfer

These are the key sections for this area in the report:

3.12 In deciding on whether a Member has a Statutory Right to a Transfer, the Government agrees that evidence of an employment link should be provided and that members should be primarily responsible for supplying it.

3.22 The Government does not consider that there is a need to pursue the alternative option of a statutory discharge letter and cooling off period.

3.23 Whilst the Government can see the attraction of The Pensions Regulator Authorisation, it would require rigorous assurance and regular monitoring of Schemes. They see the further regulation of Master Trusts as a trial run of TPR Authorisation.

3.25 The Government is reluctant to introduce additional legislation compelling members to seek guidance, which members may see as another barrier to transferring their funds, but there is a pilot running by some larger providers.

Making it harder to open fraudulent schemes

These are the key sections for this area in the report:

4.4 The Government is proposing to make it a requirement to have an active and participating Sponsoring Employer attached to all new and existing Registered Pension Schemes.

4.9 The Government agrees that pension scheme members with relevant knowledge should be free to choose their own investments. The Government will not therefore pursue the option to require pensioner trustees at this stage.

What Does All This Mean?

The first thing to say is that this paper is the result of a lengthy consultation process. It gives information on the direction that Government wishes anti pension scamming to take, but it is not a white paper, so it remains to be seen how the legislation will progress for SSAS in particular and pensions in general.

Pension scamming is serious. With an estimated £43m lost to scams since 2014, with almost £5m lost between Jan and May in 2017, our advice is to be vigilant at all times when you are contacted about your pension by any company that is not known to you. As the consultation paper shows, nothing can be done about cold calls originating from overseas. So, if any company is offering you returns that sound too good to be true, then they probably are. Contact us or call us on 0121 693 0690 instead.

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