The number of pension savers being referred to the Money and Pensions Service (MaPS), following an ‘amber flag’ scam warning from trustees has risen sharply, but data shows that in almost half of these cases the guidance service cannot identify the reason for this warning.
These figures were released following a freedom of information (FOI) request from MaPS by wealth manager Quilter. It says the figures, for the three months to June 2022, show a ‘concerning’ number of guidance sessions that do not identify the reason for this scam warning.
In total 44 per cent of cases listed an ‘unknown’ reason for the member attending the guidance session.
The data also shows here overseas investments remain a common cause for an amber flag being raised. Quilter says this may result in many potentially low risk pension transfers being put on hold for this reason.
Quilter says that due to the very broad way in which the rules are worded, some pension schemes are raising amber flags on overseas investments covering mainstream investments, such as funds from major asset managers that are investing globally. It warned that the high proportion of ‘unknowns’ is likely to create a significant skew in relation to the numbers, so the real figure could be higher still.
Quilter is calling on MaPS to proactively improve the data they are collecting from trustees, pointing out that this FOI response shows that MaPS “do not enter into correspondence with members, schemes or providers about the reason for the amber flag.”
The new pension transfer rules introduced in November 2021 require the trustees of a transferring pension to raise an amber flag, which pauses a pension transfer, if they find that there are overseas investments included in the receiving scheme, or other relevant issues. Before the transfer can be authorised, the member involved must prove they have received scam guidance from the MaPS following the transfer being flagged.
Since the introduction of the new transfer rules, a total of 3,731 members have received scam guidance from the Money and Pensions Service as a result of an amber flag being raised by a trustee (to June 2022).
Month on month, the number of amber flags raised have increased significantly, leaping from just 20 guidance sessions in December 2021 to 1,067 in June 2022. However, the rate of month-on-month growth appears to be slowing and remained broadly level between May-June 2022.
Quilter head of retirement policy Jon Greer says: “In the 12 months to 31 November 2021, the Money and Pensions Service took just 482 calls and webchats in relation to pensions scams.
“Comparatively, in the seven months that followed the introduction of the new pension rules, this number soared to 3,731. This highlights the real disconnect between the number of people whose pension transfers were potentially being targeted by a scam, versus the number of people who were able to identify this and reach out for help prior to the rule change.
“However, while it is positive to see such a noted increase in the number of people receiving scam guidance when it comes to their pension transfers – particularly where there is a genuine cause for concern – there remains a clear issue with transfers being halted where the trustees are finding an amber flag, but MaPS is not being made aware of the reason.
“The lack of information provided to MaPS in terms of the reason for the amber flag being raised is concerning. If the information is not logged, and particularly whether there was an actual risk of a scam, it will be difficult to assess where scams are focusing and may provide an inaccurate picture of the effectiveness of the regulation.
“What’s clear is that we need an improvement on the data collected to see the reasons for the member attending the scam session – no doubt this will help the session with the member, and secondly, we need to resolve the impasse that Trustees face in applying the letter of the law which is out of step with the policy intention.”
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