…said a spider to a fly.

In the past year I have reviewed more than 100 requests from pension scheme members hoping to transfer their pension benefits to another scheme. At face value, those making the requests have little in common with each other. They are unconnected by age, geographical location, wealth or occupation. They have no common features, except one: their proposed transfer was identified as a potential pension scam.

The current situation of pension scamming

Despite various initiatives aimed at increasing awareness of pension scamming in the UK, its prevalence remains worryingly high. You could take from this that current efforts to raise awareness are somehow lacking – that perhaps we need more TV ads or a Love Island poster boy to really spread the word. But while awareness can always be improved, it’s not enough by itself. I am aware that poisonous spiders exist, but I can’t say that I genuinely engage with the threat they pose, because I don’t consider it to be relevant to my daily life in Edinburgh. I don’t take any precautions against them, would struggle to recognise one if I saw one, and wouldn’t know what to do if one bit me.

How pension scamming can affect you

Many people approach pension scamming in the same way. They are aware it exists, but they assume it’s irrelevant to them. They see it as something abstract that only ever happens to someone else; something so obvious you’d have to be a fool not to recognise it; or something that only happens to someone with a million pound pension pot.

My work in the last year has taught me that those assumptions are both wrong and dangerous. Pension scamming is relevant to everyone and anyone with a pension (which means most of us). Until we engage with that, our first-stage defence against pension scamming is compromised.

Those working on behalf of pension schemes to process members’ transfer requests have a regulatory obligation to carry out ‘due diligence’, which involves checking for signs of pension scamming before allowing a transfer to proceed. As part of this, members are usually asked to provide details such as where their funds will be invested and what sort of fees they will be paying. Ensuring consistent good standards of due diligence across the pensions industry is a work in progress. But it’s only half the story. Members have an important part to play in protecting themselves – particularly given that most requesting a transfer are exercising a statutory right to do so.

Yet many members approach their scheme’s due diligence with apathy, and in some cases even a level of hostility.  Often a member feels that the due diligence process is not necessary. Their pride may be hurt by the suggestion that the decision they’re making is a poor one, or they may resent someone else having a say in what they do with their own money. In some cases a disreputable adviser is encouraging the member not to co-operate.

The result is that concerns identified during the due diligence process can be brushed off or ignored by members. Perhaps it’s easy to be suspicious of a large corporate pension provider or an anonymous trustee; easy to write off their due diligence process as an attempt to delay it or to retain funds for themselves. But while suspicion is a useful tool in the fight against pension scamming, members should ensure it’s directed appropriately.

So, what should members do? What does ‘engaging’ with pension scamming actually mean?

It means not being swayed by promises that are too good to be true. It means asking questions and being realistic. It means being as careful with our pension as we would be with our wallets. It means doing our homework and taking appropriate advice before deciding to transfer a pension. It means co-operating with our scheme’s due diligence process and, perhaps most importantly, it means never assuming that we are too clever to be scammed.

But let’s be clear: encouraging members to take greater responsibility for the security of their pensions does not mean that we should feel free to victim blame if they fail to spot the signs and lose their life savings to a scammer. The fight against pension scamming is best served by educating and supporting members – not by laying blame at their door for the criminality of others. But members must remain vigilant and open to the support available. Otherwise, pension scamming is a fight we’re always going to lose.