The most recent figures show an average of £82,000 per victim was lost to pension scams in 2018.
As scams become more elaborate and sophisticated, it’s getting harder to recognise a fraudster. So how do they work and how can you protect yourself and your savings?
Who’s a scammer?
A scammer will try to persuade you to transfer your pension funds with promises that sound too good to be true such as:
- Unusual investment opportunities with the promise of high returns
- Early access to your pension cash
- A ‘free pension review’ (a way of finding out your personal financial information)
What to watch out for
Cold calls. Since the start of this year, cold calling about pensions has been illegal. If you receive one by phone, text, or email, it’s likely a scam. If they’re initiating contact, but you can’t contact them, that’s another warning sign.
‘Boiler room’ sales tactics. Scammers often use high-pressure selling tactics to make savers feel coerced into making a quick decision. If you’re being told you have to act now and there’s no time to think or you’ll “miss out”, it’s probably a scam.
False information. Another red flag is being told things which contradict the information on reputable financial websites – e.g. saying you can access your pension before 55 in anything other than unusual circumstances. They may try and lure you by offering to help you with such transactions.
How to protect yourself
- Reject any out-of-the-blue contact. If you’re cold called about your pension, the safest thing to do is to hang up.
- Ignore any offers of a ‘free pension review’.
- Before considering any changes to your pension, take advice from an FCA-regulated financial adviser. Pension Wise also provides free and impartial information and guidance.
- Before committing to anything, make sure you do your own research. Visit the Financial Conduct Authority’s (FCA) ScamSmart pages where you can check the FCA warnings list. Check whether a company is FCA authorised. If you don’t use an FCA-authorised firm, you won’t have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) so you’re unlikely to get your money back if things go wrong.
- Remember the golden rule: if it sounds too good to be true, it probably is.
What to do if you’re targeted
- If you’re cold called about your pension, report it to the Information Commissioner’s Office (ICO).
- Report any suspicions of a scam to Action Fraud and the FCA.
- If you’ve already signed paperwork or agreed to a pension transfer, contact your pension provider immediately.