The warning came in response to a government consultation on how to tackle pension scams that closed on Monday.
PLSA said the current regulation for setting up smaller UK pension schemes is not fully effective in preventing them for being used as vehicles for scams and called on the government to be more ambitious in its approach.
Authorisation regime
The association has proposed an authorisation regime that focuses initially on new schemes with fewer than 100 members and existing schemes with fewer than 100 members that want to receive pension transfers.
“This would cover [Ssas], which, together with overseas schemes, present the greatest risk of being used as vehicles for scams,” PLSA said.
“Within the authorisation regime will be a legal requirement for smaller schemes that are new or wish to accept transfers, to appoint an independent professional trustee with a duty to blow the whistle if they suspect a scam,” the association recommended.
This requirement would be backed up by a mandatory qualification for independent professional trustees based closely on the requirements for trustees of master trusts. An alternative would be for small schemes to have a recognised professional, such as a lawyer, accountant or actuary, as the independent trustee.
Scams a major threat
Graham Vidler, PLSA director of external affairs, said: “Pension schemes see scams as a major and increasing threat to their members’ retirement savings. We welcome the government’s commitment to tackle the issue but a much more ambitious approach is needed.
“A completely new authorisation regime for pension schemes will offer savers robust protection from scammers who have been able to set up pension scam vehicles too easily in the past.
“The nature of the regime will depend on the risks presented, but we should start by introducing authorisation for the schemes with the greatest risks, such as smaller schemes and Ssas.”
