The Pensions and Lifetime Savings Association (PLSA) has responded to the Government’s consultation on scams by setting out proposals for an authorisation regime for pension schemes.
Currently, the regulation for setting up smaller pension schemes is not fully effective in preventing pension schemes being used as vehicles for scams. The PLSA proposes a new authorisation regime that focuses initially on all new schemes with fewer than 100 members, and existing schemes with fewer than 100 members that wish to receive pension transfers. This would cover Small Self-administered Schemes (SSASs), which, together with overseas schemes, present the greatest risk of being used as vehicles for scams.
Within the authorisation regime will be a legal requirement for smaller schemes that are new or wish to accept transfers, to appoint an independent professional trustee with a duty to blow the whistle if they suspect a scam.
This requirement would be backed up by a mandatory qualification for independent professional trustees based closely on the requirements for trustees of master trusts. An alternative would be for small schemes to have a recognised professional, such as a lawyer, accountant or actuary, as the independent trustee.
Graham Vidler, Director of External Affairs, Pensions and Lifetime Savings Association, says: “Pension schemes see scams as a major and increasing threat to their members’ retirement savings. We welcome the Government’s commitment to tackle the issue but a much more ambitious approach is needed.
“A completely new authorisation regime for pension schemes will offer savers robust protection from scammers who have been able to set up pension scam vehicles too easily in the past. The nature of the regime will depend on the risks presented, but we should start by introducing authorisation for the schemes with the greatest risks, such as smaller schemes and SSASs.”
The PLSA has welcomed the Government’s proposed ban on cold calling, but goes further, suggesting that the ban should cover text messages and other forms of digital messaging.