Scale of pension fraud could be £1bn, regulator tells MPs
The scale and value of money taken from consumers in pension scams is unknown, the regulator has disclosed to a committee of MPs tasked with conducting a review of pension freedoms.
While Action Fraud, the City of London Police-run national reporting centre for fraud and cyber crime, stated that they estimated the size of such frauds to amount to £43m between April 2014 and now, with victims losing on average £15,000, Ms Titcomb quoted reports that the true figure could be as high as £1bn.
Titcomb pointed out that the figure of £43m is “only in relation to reports to the police and does not include reports to other agencies”.
Such agencies include the Pensions Administration Standards Association (PASA) whose chair Margaret Snowdon recently quoted the far higher estimate.
“People are very reluctant to say that they have been scammed, they don’t all come forward,” said Snowdon.
They had arrived at the estimate of £1bn, she said, “by talking to insurers, administrators and trustees that have paid for transfers that they think are suspicious”.
£1bn just the tip of the iceberg’
And even that could be “the very tip of the iceberg”, said, Snowdon, since the full amount of sums taken in pension transfer scams won’t be known for at least 20 years, when customers reach retirement and discover that their retirement savings have been appropriated by fraudsters.
She also pointed out that “official statistics can really be under-reported,” because some victims feel ashamed to admit that they have fallen prey to a scam.
“I honestly feel that we haven’t even scratched the surface,” she said.
Titcomb said that TPR was leading a taskforce called Project Bloom, a multi-agency effort that pulled together law enforcement agencies, government departments, the pensions industry and other regulators to fight pensions fraud.
Project Bloom had identified all the stakeholder agencies that could feed into the collation of data and was now looking at how best to combine all such data in order to provide a clear idea of the scale of the problem.
“It is difficult to ascertain a figure for pension scams relating to freedoms,” said Titcomb, “as once money has left the pension regime it is difficult to track, and also victims may not mention pension freedoms when reporting.”