Government plans to combat the increasing pension scam epidemic have been described as “light on detail” by Old Mutual Wealth.
The Government’s response to the Work and Pensions Select Committee’s report on pension scams revealed tabling a workable amendment to the Financial Guidance and Claims Bill to ban cold-calling, and then making regulations to introduce the ban.
The response also revealed Pension Wise is considering further enhancements to the digital appointment and pilots to test ways for referring pension holders to the service.
Old Mutual Wealth business director Jane Goodland says: “Pension scams are a serious problem and it is crucial that it is met swiftly by the Government. However, their response to the Work and Pensions Select Committee report was light on details of their next steps.”
Goodland welcomed the government explicitly outlining their next move on the cold calling ban and heeding calls that something needs to be done sooner than the two years it would take to implement through the Financial Guidance and Claims Bill.
Since 2013, 97 per cent of pension fraud cases brought to Citizens Advice stemmed from cold calling.
Goodland says: “Eyes will be peeled on what the new regulation will entail and the pressure is on for them to get it right.”
But she says a ban will only go so far.
“It won’t stop criminals from trying to rip-off vulnerable people. What is also needed is an awareness campaign so that people know if they receive a cold call concerning your pension that they should speak to Pension Wise, a financial adviser or their pension provider.”
Goodland added: “The other key area raised in the committee’s report was increasing the take-up of guidance.
“The proposed amendment on default guidance had been inserted and then removed. This was removal was necessary as the amendment demands default guidance for those who have decided to access their tax free cash needs a re-think. If a person has already made a decision then any guidance at that point is too late. People should be getting help earlier in the decision making process and that is something the government needs to work harder to promote.”
Goodland says 58 per cent of people saying they don’t have sufficient understanding of pensions, according to the ONS, and 14 per cent don’t contribute to their pension because they don’t know enough about pensions.
“With large parts of the population claiming they don’t have enough knowledge to save, it is crucial we tackle the growing epidemic of financial illiteracy,” she says.