The Pensions Administration Standards Association (PASA) believes the industry must raise standards to protect savers from fraud and avoid putting the nation’s lifetime savings at risk.
The PASA’s warning comes as part of its response to HM Treasury’s Consultation on Pension Transfers and Early Exit Charges. The PASA is calling on the pensions industry to ensure the fullest protection possible for pension savers from fraud and says that failure to raise standards in line with other industries could, effectively, put the retirement savings of millions at risk.
Margaret Snowdon (pictured), Chair of PASA, says: “This consultation provides a welcome focus on part of the industry that needs a significant overhaul. The new pensions freedoms gave the pensions industry an opportunity to refresh and revitalise pension savings, but we also carry a greater risk if we fail to better safeguard the money entrusted to us.
“Stories of frauds and scams have been plentiful recently and present mechanisms are simply not up to standard, largely relying on exchanges of paper and ineffective registers. With the advent of pension freedoms, and to a lesser extent automatic enrolment, it is essential that transfers are subject to much tighter processes to prevent fraud and money laundering.
“We also need to hugely improve the speed of pension transfers. Given that money can be switched between bank accounts within a matter of hours, it is not unreasonable that pensions are expected to act in a similar way. We see three basic options that would support this: create a common discharge that could be used by any scheme; encourage the wider adoption of pension services; and third, trustees should be pushed to treat transfers with greater priority. If as an industry we don’t do our best to keep up, we risk looking antiquated. At the very least, a tightening up of timescales should prompt trustees to review agreements with administrators for transfers out and improve them – particularly for DB to DC scheme transfers.
