Providers and the DWP have warned of the risk of a possible spike in pensions liberation fraud triggered by pot follows member reforms.
Speaking at a Tisa event yesterday, experts said they were concerned that automatic pot transfers could open up new avenues for fraudsters.
Standard Life head of workplace strategy Jamie Jenkins says: “This will be used by some people to make money by criminal means. There will be people out there thinking, ‘as soon as I can understand this I will figure out how to exploit it to make money out of it’.”
Pinsent Masons partner Simon Laight warns that checking for liberation fraud has slowed down transfers and that pot follows member reforms could reverse that.
He says: “Progress has been made on tackling pensions liberation but perhaps we need to examine whether this is going to work in the automated world.
“With automatic transfers coming in you have got potential problems because part of liberation being slowed down has been through putting the onus on the transferring scheme to do the due diligence and raise awareness.”
Panellists at the event suggested one method fraudsters could exploit may see phony schemes registered on automatic transfer networks, allowing pots to be moved electronically before the fraud is detected.
The DWP says it is concerned about ensuring any delivery system is robust enough to resist liberation attempts. Head of automatic transfers policy in the private pensions policy division Toni Clark says: “We need a system that is simple without increasing the rick of pension liberation.”