Best-in-class administration can help schemes protect their members from the scourge of pension scams, according to independent consultancy Broadstone.
It follows recent analysis of Financial Conduct Authority (FCA) data which found that 7% of adults received a pensions-related unsolicited approach in the previous 12 months. A sharp drop compared with 16% in 2020 and 20% in 2017 – equivalent to 6.5 million fewer adults experiencing attempted scams (10.2 million in 2017 v 3.7 million in 2022).
However, there is a fear that the extent of scamming could be going unreported with particular concern around savers who may have been defrauded without knowing it.
This is why The Pensions Regulator (TPR) has recently ‘upped the ante’ on the role that Trustees and administrators should be playing in the fight against fraudsters.
A recent blog from TPR explained how it is using an Administrator Relationships function to engage directly with administrators to protect savers and tackle potential risks they may face.
TPR also flags duties for Trustees who must carry out certain checks when dealing with pension transfer requests and direct members to Pension Wise for impartial guidance. Of course, in most cases this will be delegated to administrators who will often have a broader picture of the pensions’ landscape and can report red flags to their Trustee clients, acting as the first line of defence.
Gavin Giles, Head of Pensions Administration at Broadstone noted "Trustees and administrators have a vital role to play in protecting pension savers and TPR is right to up the ante on the industry taking a more proactive stance.
“We believe vigilant behaviour goes beyond the integral due diligence on receiving schemes. It should include other measures in the administrator’s quiver like excellent data protection and record-keeping, attentive member communications and ongoing awareness campaigns. These will all help pension savers avoid a lifechanging disaster.
“For too long administration has been seen as a necessary cost by schemes, but investing in top-quality standards will have positive consequences for their members. We must keep banging the drum for administration until schemes truly recognise its return on investment at scheme level and role in helping members achieve good outcomes.”
The FCA provides a number of resources to help pension savers avoid scams alongside its ScamSmart campaign. Other industry initiatives include TPR’s new strategy to combat pension scams launched last year and its Pension Scams Action Group, as well as the Pension Scams Industry Group (PSIG) – the voluntary body set up to combat pension scams through the publication of good practice for trustees, providers and administrators.
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