Pension cold callers could face £500,000 fines as part of planned ban
Cold calls offering exotic investment opportunities to people cashing in their pension pots will be banned under government plans.
Ministers estimate eight scam calls are made every second to UK residents, leading to an annual loss of £19m.
Advice services and legitimate companies said such calls had "plagued" the pensions world for years.
The ban, which could be enforced with fines of up to £500,000, would not cover texts and emails.
However, the government will gather views on extending the proposed ban to all electronic communications.
The police already have powers to take down fraudulent websites, but calls from overseas are likely to remain a problem as the Treasury says it can do little about them.
The move, which will be formally announced in Chancellor Philip Hammond's Autumn Statement next week, is aimed at tackling a surge in scam calls resulting from the Treasury's change to pension rules.
Savers can now cash in their pension pot from the age of 55.
When that access was permitted for the first time last year, people were taking out sums averaging close to £20,000. The latest tax authority figures show typical withdrawals have fallen to about £10,000.
As predicted when the reforms were introduced, these sums have attracted the attention of fraudsters offering highly risky or spurious investment opportunities.
The Pensions Advisory Service said that the changes "have seen scammers trade off the back of the public having a recollection that the government has introduced new legislation".
- People aged 55 and over can withdraw any amount from a defined contribution (DC) scheme, subject to income tax
- Tax changes make it easier to pass pension savings on to descendants
- Many people with defined benefits (DB) schemes will be allowed to transfer to DC plans
- All retirees have access to free guidance from the government's Pension Wise service
Scams can begin with cold calls that promise "free" pension reviews or access to pensions before the age of 55.
They are followed by offers of investments in hotels in exotic locations or ethical projects offering massive returns, the Treasury said.
As revealed by the BBC, others have offered stakes in storage units, offering returns that never materialise. Many of those tricked have lost their life's savings.
Under the government's proposals, there would be a ban on all calls where a business has no existing relationship with the recipient of the call.
This would include banning calls to individuals who have inadvertently opted-in to receiving marketing calls.
Cases would be dealt with by the Information Commissioner's Office, which could impose fines of up to £500,000.
A petition to the government, launched by a financial adviser and backed by former pensions ministers, has been calling for a ban of these pension cold calls and unsolicited emails.
It has yet to reach the 10,000 names needed for the government to be required to respond, nor the 100,000 required for it to be considered for a debate in Parliament.
The Treasury will also consult on plans to hand extra powers to pension providers to block transfers of savings to suspicious operations.
It also will gather views about the abuse of small, self-administered schemes which it said were too easy to set up and often used by scammers.
One pension company has called on the chancellor to go further in the future.
"Policymakers must see this as the beginning of the process of tackling pension scams, not the end," said Tom Selby, senior analyst at AJ Bell.
"Banning cold calling will cut off one of the heads of this many-headed beast, but the government, regulators and industry must remain vigilant and consider what further measures might be necessary to deter fraudsters."