Pension transfer scams are commonplace and cause a great deal of hardship for those who put their trust in the scammer and thereby lose all or part of their pension fund.
However, the loss can also extend to pension schemes, a fact of which pension scheme trustees should be aware. If a member of a pension scheme has their assets misappropriated, they may be able to take a claim to the Pensions Ombudsman. An order for compensation from the pension scheme may be obtained if it fails in its duty to make adequate checks in relation to the pension provider to which the transfer is proposed and fails to make the proposed transferor aware of any misgivings it has. In addition, the pension scheme that is making the transfer should send a fraud warning leaflet to the member before the transfer is carried out.
Recently, a policeman whose pension fund was lost to a fraudster was able to bring such a claim against the Police Pension Scheme, with the result that the scheme was ordered to make good his loss through either the provision of equivalent pension rights to those he had lost or reinstatement to the scheme.
If you are involved in running a pension scheme, it is essential that you make sure that requests to transfer funds out of the scheme are properly examined and procedures are in place to minimise the risk of fraud on the pension scheme members.
For advice on your rights and responsibilities as a pension scheme administrator or trustee, contact us on 0207 822 4000 or email firstname.lastname@example.org