Over-55’s exposed to pension scams, warns RSM

Over-55’s looking to supplement their income during and after coronavirus by accessing their pension pots could be leaving themselves increasingly susceptible to scams, RSM has warned.

Whilst any age group faces the same threat, over-55’s may be more active participants in accessing their funds as they are legally able to draw down the benefits.

The alert echoes a recent warning by The Pensions Regulator about the increased risk of members being lured into transferring their pension pots into so-called ‘safe haven’ funds, but which offer little in the way of protection.

RSM has warned of increased fraud and data security risks associated with pension staff working from home, as usual cyber and data controls may be weakened if staff use home WiFi networks for sensitive data transmission between service providers. 

Ian Bell, partner and head of pensions at the leading audit, tax and consulting firm, comments: ‘There has been a notable increase in phishing and ransomware attacks targeted at individuals and businesses since the pandemic began. Unfortunately, cyber criminals thrive during times of crisis and disruption when people are otherwise distracted dealing with other business priorities.

‘Pension administrators’ controls could also be compromised if normal office protocols are unable to be followed, for instance over member identity or second checks over transfer value calculations. Trustees should ensure their Coronavirus Business Continuity Plan is regularly monitored and updated to ensure it is fit for purpose.

‘With stock market turbulence resulting in significant reductions in pension pot values, and with many workers questioning the financial viability of their own employers, the conditions are sadly conducive to scammers trying to prey on vulnerable pension scheme members.

‘Trustees, employers and administrators all have their part to play to try and protect people from making poor decisions, but this may not be enough. Now may be the time for the Government to enforce a temporary ban on transfers to protect the most vulnerable.

‘Pension administrators will also have to ensure that IT security is prioritised at a time when many staff may be working remotely and where the usual protections and controls may be compromised.’

The Pensions Regulator is advising schemes to exercise extreme caution if a saver asks about transferring their pension and is urging them to signpost members to ScamSmart which has specific guidance relating to coronavirus.

Trustees should also signpost their members to the Money and Pensions Service – particularly those approaching retirement and whose pension may have been affected by the current economic conditions.

Related industries

Coronavirus: staying ahead of the risks

Discover the key considerations that you need to be making for your business in the midst of this global health crisis.

Find out more