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Ministers are to announce new regulations to warn savers when to take advice before transferring retirement savings into alternative funds. The proposal was drawn up following concern that tricksters are fleecing vulnerable older people into handing over their life savings to bogus investment schemes.
Under the plan, pension trustees will be able to put a “red flag” alert on a suspect financial transfer before any money is moved.
The warning will tell the saver to seek independent advice before confirming that the transfer can go ahead.
Work and Pensions Secretary Thérèse Coffey will set out the proposal today during a Commons debate about the Government’s Pensions Schemes Bill.
She said last night: “For too long callous crooks have been luring savers with get-rich-quick schemes and dodgy investments, only to walk off with someone’s hard-earned pension.
“While it is vital people have the freedom to do as they wish with their pension pots, I cannot stand by as unscrupulous scammers fleece them of financial security in later life.
“No-one should lose the retirement they want because of scams, so it is only fair that they can plan for this knowing there are robust mechanisms in place to protect them.”
The proposal is part of the Bill, which includes a series of measures drafted to try to improve protection for consumers in the pensions industry.
It will mean that savers will be required to confirm, in certain circumstances, that they have received information or taken guidance about the risk of scams when moving their money.
They will be legally obliged to seek professional guidance to ensure they understand the potential risks involved in the transfer.
Other measures in the Bill include new legal obligations to inform people aged over 50 about the choices they need to make ahead of their retirement.
The legislation will also strengthen protections around more straightforward pension transfers by requiring savers to provide evidence of an employment link or, if transferring abroad, residency, before the transfer can take place.
Organisations such as the Pensions Advisory Service and Pension Wise are also able to offer impartial information and guidance to ensure savers are aware of the potential pitfalls of pensions transfers.
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