The Pension Regulator, the U.K. government body that oversees defined benefit pension plans, is calling on plan sponsors to help advance a three-pronged strategy to fight pension fraud.
“Over many years, we have worked to prevent savers’ losses and put fraudsters in prison: running large-scale public awareness campaigns, leading a multi-agency response to the threat through [the pension scams action group]. . . . But the truth is, we must all do more to combat pension scams,” said Nicola Parish, TPR’s executive director of frontline regulation, in a press release.
According to the regulator, the strategy’s success is dependent on the support of the U.K.’s pensions sector, which it hopes will be more proactive about reporting cases of fraud. Between 2017 and 2020, just £30 million ($46 million) of pension fraud was reported, though the regulator believes the vast majority of cases go undetected. Under existing rules, plan sponsors aren’t required to report cases of fraud.
The new strategy is aiming to inform members of the risk of scams, encourage pension plan sponsors to adopt higher protection standards and help secure information the regulator requires to disrupt and prevent fraud.
“Industry must act to deliver good outcomes for savers by being proactive in their pension scam warnings, innovative in driving improvements in protection standards and reporting potential crimes to the authorities,” said Parish. “Building on this, we and our partners in regulation, law enforcement and government must also play our part [in] making sure schemes are up to standard and working together effectively to keep savers’ money secure.”
The regulator will also review its data-sharing agreements with several other financial sector regulators and government departments. The review will inform the development of new policies designed to combat emerging threats.
Along with the new strategy, TPR is developing a pension scams action group responsible for producing annual or biennial strategic threat assessments of new risks faced by U.K. pensions. It’s also considering the launch of a hub used by the action group to coordinate its intelligence-gathering efforts in order for it to better prevent and disrupt fraudulent activities.