Pension scam losses treble month after freedoms


Losses resulting from pension scams trebled in May, just a month into the roll out of the pension freedoms.

National data collected by City of London police show reported losses shot up 235 per cent in May to £4.7m from £1.4m in April, according to the FT.

There were 3,704 reports of pension liberation fraud in the two years to May 2015, with combined losses of around £25m.

Average losses from scams are now at around £15,000.

Prior to the reforms savers were typically targeted by firms offering early access to pension via “liberation” schemes.

But fraudsters have changed their tactics now people can take their entire defined contribution pension pot as cash from the age of 55.

The Department for Work and Pensions, part of a multi-agency taskforce tackling scams, says the data “should not be taken out of context or wrongly described as a spike.”

It says: “Rises could be due to a number of factors, such as increased industry reporting or rising awareness.”

A DWP update published today reveals 15 scam websites have been suspended, and the National Crime Agency has snapped up 70 domain names to prevent them from falling into the hands of criminals.

Association of British Insurers figures released in July show savers have withdrawn £1.8bn in the first two months of the pension freedoms.

In April and May, savers took out £1bn in 65,000 cash withdrawals from pension pots. The average pot taken was £15,500.

There have also been 170,000 withdrawals from income drawdown policies, worth £800m.

Savers have bought 11,300 annuity policies, worth £630m. And 10,300 income drawdown plans have been purchased, worth £720m.

This compares to £1.2bn a month in annuity sales at their peak in 2012, when £100m per month was put into income drawdown products.

The average annuity was purchased with £55,750 in April and May, and the average fund put into drawdown was £69,900.