The “true scale” of pension scams remains unknown as only a minority are reported and data is not collected in comparable ways across the industry, the Pensions Policy Institute has warned.

A policy paper from the PPI, published yesterday (May 19), found data available about the number of scams taking place across the industry, as well as the amount lost in each scam, did not offer a comprehensive view of the true scale of the issue. It warned this made it harder to address it.

According to the PPI, low levels of reporting made it difficult to assess how the introduction of the pension freedoms in 2015 may have exacerbated the problem. But it found pension freedoms caused a clear shift in the way scammers marketed their tactics.

Before pension flexibilities came into force, most scams focussed on pension liberation but now they focus on investments. The PPI found this particularly worrying as it made it harder to combat the issue as funds often leave the regulatory landscape of pensions.

Investment scams include both transfers to pension schemes that invest inappropriately, as well as flexible access to cash from defined contribution pots in order to invest outside of the pensions landscape.

The former is considered a pension scam, meaning schemes and regulators have powers to intervene, however because the latter occurs outside of the pension system, intervention is beyond the industry’s and regulator’s remit.

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