Evolution of the Scorpion's Sting
1st April, 2015
Not even remotely related to the latest offering from a permed and mulleted German heavy metal band (sorry, showing my age), this week we saw the Pension Regulator re-launch their Scorpion campaign highlighting the dangers of Pension Scams and how they are evolving.
It is fair to say that one of the most damaging pension scams in recent memory, pension liberation, has had a devastating effect on people planning for their financial future. From early crude attempts to set up occupational pension schemes to accept transfers, liberate cash to individuals under age 55 and line pockets along the way, the scammers evolved. They reacted to what the Regulator and the industry was doing and provided slicker and more professional looking offerings. By doing this millions of pounds continued to find their way into the scammers pockets. To put some scale to this, the last figure I saw for the known amounts of funds paid into pension scams was £495m, by no means an insignificant problem!
With the imminent arrival of pensions freedoms and the ability to cash in your pension to buy a Lamborghini (well, maybe a nice scale model) the next stage of the evolution of the pension scam is predicted whereby scammers will target the unwary and unwise with promises of wonderful investment returns (especially through overseas investments), upfront loans and pension access before age 55.
It is good to see that the Pension Regulator has recognised this evolution and has evolved itself by revamping and re-releasing the Scorpion Campaign. This re-launch has been backed up by a social media campaign and has the support of the pensions minister, Steve Webb, and the Pension Advisory Service. It should also have the support and buy-in from everyone in the pensions industry who has the best interests of members in mind and the will to educate them so that the issue and the dangers are known. Only by such an education process will awareness be increased and the flow of money to the scammers stemmed.
So what are the warning signs? The Regulator has highlighted the following
- Individuals contacted out of the blue with by text, phone call or pop up website offering a free pension review, one off investment or legal loophole.
- Marketing material offering incredible investment returns.
- Being rushed into signing documents with a promise of a limited time offer.
They have also highlighted the issue of bogus one man schemes being set up to facilitate the scam.
Perhaps the best way to ensure that the transaction is not bogus is to take proper regulated advice. Perhaps easier said than done. It should also be remembered that there is the new Pensionwise service. Whilst not providing advice they are aware of the warning signs of pension scams.
As Lesley Titcomb, CEO of the Regulator said in launching the updated Scorpion campaign “We have to be tenacious to foil the scammers’”. She might also have said, we need to evolve to be dominant.