Callcredit Blog

Pension reform – Is the pensions industry ready?

Credit Risk & Affordability Fraud & Verification General

Last year George Osborne announced that from 6th April this year people would be able to cash in their pension pots under a more favourable tax regime than is currently in place. Under the plans, people approaching retirement would also be freed from having to buy an annuity.  People aged 55 and over will be able to take lump sums from their private pension pots on a one-off or ad-hoc basis and affectively use their pension pot as a piggy bank.

The government has made the changes at speed in what seems a clear attempt to make people feel financially better off .  Some ministers have warned those who will be 55 or over this spring to delay exercising their new rights to cash in their pension pots in April amid rising fears that the industry will not be able to cope. Ultimately with pension companies handling such large volumes of customer requests a large proportion of interaction will inevitably be driven online.

Pensions companies have recruited  additional staff to help deal with customer enquiries fearing a risk that they’ll be inundated with enquiries come 6th April.  The assumption is that volumes will be three times the normal level – but obviously they could be significantly higher. They will have to build new administration systems as well as implement new compliance processes and train staff.  From talking to others in the pensions industry it appears many companies are simply not going to be ready.  It is likely that hundreds of thousands of investors are going to want to access their pension pots in the first weeks and months after the start of the new tax year

With the availability of large cash sums this won’t have gone unnoticed by the ever present fraudsters. The fear of ID related fraud is looming larger than ever and one such type likely to be on the increase is ‘family fraud’.  This is where a family member attempts to assume the identity of the pension holder and withdraws money from the relative’s pension pot into their own bank account.  At Callcredit we’ve been approached by a number of pension providers to help with this and have quickly and successfully deployed our CallValidate solution.  This not only helps verify an individual’s ID’s but confirms that any funds paid are paid into the bank account of pension holder only.

While pension providers remain committed to making reforms work for customers there’s likely to be teething problems come 6th April and I eagerly await to see what the impact will be on pension fraud as the month’s progress.

Author: Marcus Hayes

Leave A Comment

Your email address will not be published. Required fields are marked *