Former Pensions Minister Ros Altmann has called for pension transfers to be put on hold for six months to combat the growing risk of scams and to help stabilise schemes.
The ongoing coronavirus pandemic has caused considerable market volatility, and Altmann warned that this could result in valuations being “unreliable”.
“Pension scheme trustees and IGCs will be struggling to understand what the underlying investments are worth and the turmoil in the markets, coupled with staff being out of the office, suggests that any current valuation risks being unreliable,” she stated.
“Therefore, introducing measures to delay all pension transfers for up to 6 months would seem a sensible way of helping to stabilise pension schemes and allow time for a clearer picture to emerge.”
The former Pensions Minster expressed concerns that, with more people at home or out of work, the risk of cold-callers reaching savers had increased and “market mayhem” may help scammers persuade people to fraudulently transfer their pension.
“So, in the interest of customers, putting transfers on hold could protect more people from becoming the latest victims,” she added.
Altmann also urged pension administrators to take the opportunity to reconcile records and cleanse their data to improve the accuracy of pension information.
She argued that accurate data was “essential” for the upcoming pensions dashboard and would provide significant benefits in the long run.
“Using the dislocation associated with the coronavirus to focus on the underlying vital issues relevant to pension schemes would be a huge benefit to pension customers in the long run,” Altmann continued.
“Rather than trying to keep schemes operating as normal in the short-term, it would be far more valuable to take the opportunity to correct the past mistakes that will otherwise continue to plague pensioners in future.
“If pension records are wrong, pensioners will be at risk of reduced pensions in future. Increasing attention given to pension administration now will save more pain later.”
— to www.pensionsage.com