Pension scams can be damaging to individuals, pension schemes and society generally. People are easily tempted by such offers, but many of those who are taken in find themselves transferring their secure benefits to rather dubious and risky unregulated investment structures, often based overseas. Huge fees are often deducted from the funds and transferees may be subject to tax penalties which they had not understood, leaving transferees with substantially reduced benefits for retirement. In some cases the funds are simply stolen.
Pension scams present a real dilemma for trustees and providers and those that administer schemes on their behalf. The individual often has a statutory right to transfer, but it is the trustees and providers who are required to determine that the receiving scheme is one which they are lawfully able to transfer to and who have a duty to act in the interests of all scheme members, including the ones requesting a transfer to another arrangement. There is no magic bullet, so judgments have to be made, balancing legal rights and risks and trustees and providers struggle with such conflicts on a daily basis. They therefore have called for guidance in making such judgement calls.
To answer the call and to ensure an appropriate response to pension scams, the pensions industry decided to develop a Code of Good Practice, written by a group made up of the key stakeholders, including trustees, administrators, legal advisers and insurers. The Code, which follows, has been reviewed by a wide group of industry bodies and organisations to ensure broad acceptance and encourage widespread adoption of its principles.
To read the full 'Combating Pension Scams: A Code of Good Practice' report, click here.
The Code is for guidance only and does not purport to constitute legal advice. The Code is not exhaustive and nothing in the Code can be relied upon as evidence of compliance with any other legal or regulatory requirement. The Code relates to circumstances prevailing at the date of its publication and may not have been updated to reflect subsequent developments.
Following the Code does not relieve a party of its legal or regulatory obligations and following the Code may not prevent a claim being brought against a party.