Although the crackdown, with an information campaign at the heart of it, is to be formally unveiled on Thursday, the Pension Regulator began briefing UK journalists on it last week.
As part of this pre-announcement briefing, Pension Regulator chief executive Bill Galvin appeared on the BBC’s Money Box radio show on Saturday to highlight what he said were the dangers people face when they respond to scams which invite them to “unlock” money from their pensions before they are due to start receiving pension payments.
These dangers were described as including the loss of their pension money through charges, fake investments, and even the possibility of an unauthorised payment charge levied by HM Revenue & Customs.
"In the last year, the amount lost to these scams has doubled, to an estimated total of £400m," Money Box presenter Paul Lewis noted.
Galvin acknowledged the increase, and said it was believed to be due to the fact that “more and more people are finding themselves in challenging economic circumstances, and there are more people prepared to take advantage of that”.
“The telltale signs here are cold calling; unsolicited calls, texts or emails; and very often, pressure for people to act quickly, and to put pressure on their pension scheme to execute transfers quickly," Galvin said.
"Some of the most egregious examples of these vehicles that we’ve seen have involved an offer to provide an individual with half the value of their pension; the other half is invested overseas. There is a significant administration charge of perhaps up to 10% or 20% made, and then the individual finds out that they have to pay a tax charge of between 55% and perhaps up to 70% on the amount that they’ve been given.
"So you could very easily transfer a pension pot of £20,000 into a net value of £4,500 by the time all these things are done.”
A spokeswoman for the Pension Regulator said that the campaign was focusing on “behaviours…within [the] UK market”, rather on the market that provides international pensions like QROPS to expatriates.
However, one Europe based adviser whose clients include Britons, who said has been studying the press reports of the Pension Regulator's new campaign, said he thought the crackdown would almost certainly have an impact on the QROPS transfer market, as “all UK pension trustees may become more cautious about transferring anything, particularly if more than a few transfers seem to be going to the same QROPS providers”.
Geraint Davies, managing director of Montfort International, a UK-based pensions specialist, agreed.
“Many of the same issues and concerns that affect UK pension schemes also impact on QROP schemes, and the general public needs to be aware of them,” he said.
Geraint added that he approves of the crackdown, because “there’s no place for scams like this in either the self-invested pension scheme or QROPS markets”.
A measure of the scale of the campaign against pension scheme fraudsters is that it will involve a number of government agencies in addition to the Pension Regulator, including the Department for Work and Pensions, HMRC, the Financial Services Authority, Serious Fraud Office and Action Fraud.
In addition to seeking to educate consumers, the effort is also understood to be expected to target pensions professionals, with information about how they may legally resist the request of an individual to transfer a pension to a scheme about which they have concerns.
The campaign comes as HMRC has been taking an increasingly hard line against QROP schemes and jurisdictions that it feels are operating outside of what it considers to be the spirit of the legislation under which such pension transfers are made possible.