Phoenix has reported its prevention £26m of pension fraud to date, with almost £2m worth blocked since pension freedoms were introduced in April.
The UK’s largest specialist consolidator of closed life funds identified 1,650 suspicious companies or schemes which it believes are involved in scams.
It also claimed to have prevented 1,200 people from losing their money and warned that the focus of scammers has shifted towards self-invested pension schemes and ‘boiler room’ style investments.
Many of the new schemes have been set up to directly promote unregulated investments to consumers looking to take advantage of pension freedoms.
Since the reforms, Phoenix said it has prevented 125 cases totalling £1.8m in potential customer losses.
Despite the publicity and warnings, consumers are still taking risks with their savings, with research recently commissioned by Phoenix finding that nearly two in five (39 per cent) people who were contacted about a ‘pension review’ either acted on it or considered doing so.
Savers are also prepared to consider high risk investment strategies to attempt to boost returns on their savings, with almost a quarter (23 per cent) looking at investing in property, one in 10 considering ethical investments such as tree plantations and a further one in 10 contemplating alternative investments such as storage units, oil and gas well and airport car park spaces – all schemes where fraudsters have been known to lurk in the past.
When deciding where to invest, only half check that the companies they are using are registered with either the Financial Conduct Authority or on Companies House.
Of the cases Phoenix analysed, 48 per cent per cent on hold at Phoenix are to suspicious Ssas or Sipp schemes, 33 per cent to suspicious overseas pension schemes and 19 per cent to suspicious defined contribution occupational schemes.
While it has seen scammers try to get their hands on pots of over £100,000 in value, Phoenix is most commonly protecting customers with pots of under £12,000 from being defrauded.
Parminder Dhothar, intelligence and investigations manager for Phoenix Group, said: “Consumers need greater education on the risks of fraud – especially those taking cash and reinvesting the funds, as it is more difficult for providers to prevent them from being victims.
“Many people are not aware of where to get advice to help them make the right investment decisions and, with only with only one in 10 people opting to speak to an independent financial adviser, it is even more important to raise awareness of the issue and ensure consumers are adequately protected.”
Phoenix’s report on encountering pension scammers comes after The Pensions Regulator published details of its investigation into a suspected multi-million pound scam case.
The watchdog’s report detailed how three individual trustees - Alan Barratt, Susan Dalton and Julian Hanson - acting on third party instruction from David Austin, were deemed by the regulator to have misappropriated scheme funds and exercised poor trustee governance.
Following its inquiry, the regulator believed it was reasonable to infer that a pension scam had taken place, in which funds totalling around £13.7m belonging to 242 members have all but disappeared; including through the payment of “exorbitant” fees and commission payments.
emma.hughes@ft.com
