1. How Pension Scams are Developing
PMI Trustee Seminar
How Pension Scams are Developing
Sean Browes and Mike Crowe
Dalriada Trustees Limited
1 December 2015
6 June 2017
Private and Confidential

2. Appointed to Ark schemes in 2011 (13 schemes)
Dalriada Experience
Appointed to Ark schemes in 2011 (13 schemes)
Appointed to Pennines and Mendip schemes in 2012 (3 scheme)
Appointed to a further 29 schemes in 2013, 17 schemes in 2014, 1 scheme in 2015, 5 schemes in 2017
68 schemes in total
c. 3,000 members
In excess of £130m funds transferred in 2

3. Size of the problem
What’s in a number … ??
“The amount that has been ‘liberated’ or transferred from pension schemes in this way is known to run into the hundreds of millions of pounds, with perhaps tens of thousands of members affected.” (tPR )
In 2014 it was widely reported that £495m had been paid over to pension scams
Recently, CoLP reported £8.6m lost to pensions fraud in March 2017
In the same release, £13m March 15 to March 16
SFO investigating £120m paid to Storage Pods 3

4. Size of the problem What’s in a number … ?? No one really knows …
Possibly billions? TPR – “likely to be substantially higher as not all activity is reported” Andrew Warwick Thompson interview May 2017
JLT has speculated £3bn by 2018.
£1.3 trillion assets in occupational schemes.
Pension freedoms may mean more people will fall victim to scammers. 4

5. According to stats from Citizen’s Advice*
Size of the problem
According to stats from Citizen’s Advice*
10.9m pensions consumers received unsolicited contact since April 2015
8.4m consumers offered unsolicited pension advice/reviews in the last year
Action Fraud – in first 6 months of Pension freedoms the average pensioner affected by pension fraud lost £163,000
The average consumer has difficulty in spotting scam offers
*Source - Citizens Advice report “Too Good to be true?” March 2016 5

6. Are the investments real or just a scam?
Charges on Transfers
The true cost of a transfer is often hidden, and that’s before the scam element kicks in:
Introducer fees (to cold callers and third parties) of up to 30% of amount transferred
Set up fees are common
Kickbacks - often hard to identify but ultimately deflate investment.
Are the investments real or just a scam? 6

7. Let’s look back at the evolution of scams to date.
Pension liberation … old style
Legitimate loopholes / models ?
Investment scams
The scam and the scammer evolves and stays one step ahead. How? 7

8. The future direction of the scam and the scammer.
Pension Freedoms – scammers follow the money and this is where the money will be
Low interest rates – High opportunities for scammers
Cold callers and other means of initiating contact – scammers need a “route to market”
The SSAS that is not really a SSAS
Unregulated Investments – the greatest opportunity for growth or the biggest risk for loss?
Why does the money go overseas?
Is it always a scam? 8

9. Is it always a scam?
New routes for access to funding.
Mastertrusts 9

10. How can we fight back?
Difficult position for Trustees – Legal position v fiduciary position (Hughes case)
Government position
Cold call ban – will we have one?
Tax on overseas transfers
Regulators position – education and awareness. Cold calling made illegal so easier message even if the scammers relocate.
Consumers. Awareness, financial education. 10

11. Questions 11