MPs issue scam warning over pension reforms

New freedoms introduced last year gave people over 55 a wider range of choices

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Ministers have been urged to ensure that anti-scam protections are built into Government policies amid fears pension reforms are being exploited by con-artists.

New freedoms introduced last year gave people aged 55 and over a wider range of choices over how they can use their pension pots, enabling them to access their money when they want to.

But Julian Knight, the Conservative MP for Solihull, suggested so-called pension unlocking has attracted the interest of fraudsters.

Leading a debate on the impact of scamming on the vulnerable, he raised concerns about people trying to use money from their pension funds to invest in "unregulated investment" like penny shares which are "worthless".

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He said people should "never put their pension at risk".

"This pensions unlocking as it's called is just one way that con-artists are trying to exploit the Government's new more liberal pensions system," he said.

"I fully support the Government in its desire to give more power to individual savers.

"But cases like these highlight how important it is to have anti-fraud protections developed alongside policies rather than afterwards."

Meanwhile, Labour's Jessica Morden (Newport East) agreed as she stressed the importance of safeguarding against such activity when policies are formed rather than after they have been rolled out.

She said: "Can I agree with you wholeheartedly that it's important that Government build in safeguards when they are developing policies in order to avoid people being scammed off the back of what are legitimate Government schemes."

The introduction of unlockable pensions prompted concerns that people would cash in and blow their fund in its entirety on expensive luxury purchases like sports cars.

Mr Knight also warned of the overall impact of scamming on vulnerable people.

"Scammers take so much more than cash, they can rob us of our self-confidence and elderly citizens of the ability to live independently," he said.

He said research by software provider Truecall found 29% of victims suffer a major depressive episode within 20 months of the crime, compared to just 2% of non-victims.

Meanwhile, generalised anxiety disorders affect 39% of victims, compared to just 15% of non-victims.

He said the annual cost of fraud had been estimated at £52 billion a year by the Chartered Trading Standards Institute while Experian found fraud costs the UK economy £193 billion a year.

Home Office Minister Sarah Newton told MPs the Government "regards tackling scamming as a priority".