Pension liberation scams are in continued decline, according to The Pensions Regulator (TPR), although retirement savings are increasingly vulnerable to pension-related investment scams.

TPR’s Pension scams threat assessment stated that while there were still some examples of attempted pension liberation scams, reporting in this area mainly related to historical offending.

However, developments in the area of investment scams have increased pension holders’ vulnerability to threats such as cloned firms and recovery fraud, where victims are targeted again with false promises in assistance in retrieving their lost funds.

On scams relating to high fees and unsuitable advice, TPR noted that while the suitability of defined benefit to defined contribution transfer advice had improved, it was still at an unacceptably high level.

In its summary of industry responses, the regulator stated that respondents acknowledged that scale was difficult to calculate and comparison between industry members remained a challenge.

Furthermore, industry experience “understandably” varied on the nature of their role in the sector, with one respondent estimating that less than 5 per cent of transfers raised concerns, while another estimated it at up to 50 per cent.

“It is highly likely that this disparity is due to a difference in defining the problem rather than a like-for-like comparison,” TPR noted.

Commenting on TPR’s scam threat assessment, AJ Bell head of retirement policy, Tom Selby, said: “Despite substantial government and regulatory efforts to clamp down on fraudsters, financial scams continue to ruin people’s lives.

“The average scam loss is estimated to be in the region of £75,000 – around £13,000 higher than the average value of a pension pot accessed for the first time. In short, many scam victims will see their entire retirement blown apart, with no guarantees they will get any of their money back.

“The model of choice used by scammers has shifted away from so-called ‘pension liberation’ fraud – a transfer model aimed at allowing access before age 55 – and towards financial scams outside pensions.

“Post-pension freedoms, encouraging people over 55 to withdraw their funds and invest in dodgy vehicles is by far the easiest way for scammers to make money.

“There is some anecdotal evidence the pensions cold-calling ban has discouraged – although not completely eradicated – this problem. Although fraudsters are now increasingly using social media to target people.

“Policymakers and the wider industry have ramped up efforts to protect savers from scammers in recent years, with by far the most effective tool being education.”

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