Caveat Emptor: Beware Pension Scams

Victims of pensions scams could lose 22 years’ worth of savings within 24 hours, according to new research.

The average amount of victims lost to criminals in 2018 was £82,000 and that was just among those who came forward and reported their losses.

It takes an average of 22 years to build up £82,000 in a pension pot, according to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).

For those victims who shared their story for the study, their life savings disappeared in a matter of hours.

The latest HMRC figures show that £30.7bn has been withdrawn from pensions since the rule changes allowing savers to access as much of their retirement savings as they like. It’s therefore no surprise that criminals are going after the jackpot prize of someone’s nest-egg.

Fake news

Indeed, scammers are bombarding people aged 55 and over offering them bogus investment opportunities to get hold of their pensions savings.

Opportunistic criminals are increasingly trying to persuade savers to move their cash into schemes that do not exist.

One of the most common scams since the pension freedoms were announced has been enticing investment opportunities abroad.

Low interest rates on savings accounts are tempting more people to take on extra risk which means they could get caught out by these fake investments which result in people losing their life savings, leaving them with little or no savings for retirement.

Genuine fakes

Investment scams are usually difficult to spot because they’re designed to look like genuine investments. The scammers may have a professional looking website and documents.

But there are telltale signs. They might claim to know about loopholes that can help you get more than the usual 25% tax-free offer high returns of over 8% from overseas investments or new or creative investments.

They might suggest you put all your money in a single investment (in most circumstances, a financial adviser will suggest you spread your money across different schemes).

If you’re offered a ‘must-have’ investment or a free pension ‘review’, alarm bells should ring.

Choosing the right retirement income product is a big decision and shouldn’t be done quickly or under pressure.

Top tips

Fraudsters can approach you by post, email or telephone. Since nuisance calls about pensions are now illegal, no genuine company would phone you out of the blue.

Deal only with companies that are authorised by the FCA. You can check by calling 0800 111 6768 or online at fca.org.uk/register.

Double check any opportunity using the FCA’s scam detector at scamsmart.fca.org.uk/warninglist.

If you’ve been a victim of a scam, report it to the police and also contact Action Fraud.

The information you give to Action Fraud can help track down the scammer. You can report the scam online or by calling 0300 123 2040.

If you receive a cold call about your pension, report it to the Information Commissioner’s Office on 0303 123 1113.

In the run up to Christmas, con artists play on the season of goodwill and will do anything to get their hands on cash.

Be on your guard.

If you want more information, check out our Guide to pensions.

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