Pension administrators of defined benefit (DB) pension schemes will be expected to play a pivotal role in the fight against a new pension scam, says the Pensions Administration Standards Association (PASA).
With the new pension reform coming into force in April 2015, scammers are targeting people with DB schemes to convince them switch to a defined contribution (DC) scheme. Under the reforms, only those with DC schemes will be able to withdraw their pensions as lump sums.
According to PASA, scammers have been claiming to be providing government-backed material to convince people to switch. However, the government only issued draft regulations covering the changes on 4 February.
Geraldine Brassett, member of Policy and Strategy sub-committee at PASA, said: "We're expecting administrators to play a pivotal role in the fight against a new type of pensions scam, where advisors are already stating they are providing government-backed material to members to help them decide to transfer to a DC arrangement."
In addition, PASA highlighted the demands administrators will be facing this year around providing transfer quotations and retirement quotes for people transferring from DB to DC schemes. There will also be challenges around providing guidelines regarding the current value of former, deferred pensions alongside details of active pensions, and ensuring members seek advice prior to making decisions.
Brassett said: "We're advising administrators to be aware of possible risks for themselves and their sponsors - such as whether an automatic offer of a transfer value at retirement could be construed as an inducement by the sponsoring employer for a member to transfer out of the DB scheme in order to reduce the liability."