18th September 2018

Once again, pension scams are making headlines. Research from the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) discovered that the average victim of a pension scam loses £91,000; a devastating sum to lose when you’re planning your retirement years.

The figures are likely to be just the tip of the iceberg too. In 2017, 253 victims reported a pension scam to Action Fraud, totalling £23 million. However, it’s thought that many crimes of this kind either go unreported or unnoticed for a significant period of time.

Due to the long-term nature of retirement saving, it could be years or decades before you even realise that your money has been taken or invested in risky holdings if you don’t regularly check your pension.

Despite pension scams decimating pension savings and meaning victims have to completely rethink their retirement plans in some cases, awareness still remains low. The FCA and TPR have launched a joint campaign in an effort to remedy this and ensure pension holders are alert to the most common tactics fraudsters use.

How do pension scammers work?

When it comes to pension scams, many of us think: ‘It will never happen to me.’ It’s a mindset that criminals take advantage of.

There are many ways that fraudsters seek to take advantage, but the most common way starts with unsolicited contact. This can take the form of a call, text, email, or letter. Scammers will often position themselves as an expert in the field, sometimes claiming to be a pension or financial adviser. It’s worth noting that some fraudsters will use the ‘clone firm’ tactic, where they will provide you with the genuine details of a financial company, so always check the finer details and verify this.

The fraudsters will, of course, seek to make their proposition as attractive as possible. They may suggest that you can access guaranteed high returns or your pension sooner than 55; both of these should be red flags. According to the FCA, the terms ‘pension review’ and ‘pension loan/liberation’ are among the most searched investment and pension scam terms to keep an eye out for; it’s a line that one in eight pension holders aged 45 to 65 would fall for.

While your communication with the fraudster may start off as friendly and professional, when you reject an offer or request further information they may become pushy or threatening; again, this should be an instant red flag. Scammers will want to tie up the contact as soon as possible and, therefore, will try to push you into making a decision quickly.

When putting forward investment options, scammers are likely to downplay the risks or suggest there are no risks at all. All investments carry a degree of risk and professionals will be more than happy to discuss these with you, so if you feel that a ‘pension adviser’ isn’t providing you with all the information in terms of risk, take a step back.

The suggested investments scammers offer are typically unusual or overseas too, such as those for overseas hotels, forestry, or green energy schemes, and are not regulated by the FCA.

With a better understanding of how pension scams operate, you’ll be in an improved position to spot a criminal should you be targeted.

6 steps to take if you think you’re being targeted by a pension scammer

Even when you’re vigilant, there is a chance that you’ll be targeted by pension scammers. If you’ve handed over your details and are now worried or you just have suspicions about unsolicited contact, there are some steps you can take.

1. Check the FCA register

If you’ve received unsolicited contact and want to verify it (a step we always recommend) the place to start is the Financial Services Register.

This register contains the details of those firms that are registered with the FCA as well as flagging up the details of known scammers. When you search for a regulated firm or individual, the information provided will include a variety of details, including contact information, allowing you to rule out being targeted by a clone firm too.

Even if you’re not worried about scams, we advise taking this step; it can give you more confidence in your decisions and ensure you have all the information you need.

2. Ask questions about the proposal

Scammers will usually offer up only scant details about the incredible investment opportunity they’re proposing. So, taking the time to ask questions, such as where your money will be invested and the level of risk, can indicate that you’re not speaking to someone genuine.

It’s always a good idea to take an interest in your finances and to take steps to understand the decisions you’re making. If you’re not sure about something, ask. A professional pension or financial adviser will be happy to go through it with you.

3. Always take the time to think about decisions

Never make a decision about your pension or investments in a single call. There’s a lot to weigh up and you can often benefit from taking a step back. Any decision relating to your pension is a big one that could affect decades of your life.

Scammers will often try to push you into a quick decision, perhaps saying it is a ‘limited time offer’ but don’t fall into this trap. Sometimes a bit of time to think can give you the perspective to realise that the offer is too good to be true or you may realise you have further questions to ask.

4. Seek independent financial advice

Attractive investments can be tempting, especially when a scammer starts talking about an opportunity that gives guaranteed returns that you can put all your pensions savings into. Often what a scammer advises will be at odds with what an independent financial adviser will recommend. An adviser will be able to alert you when it’s too good to be true or suggest the questions you should be asking to learn more.

5. Contact your bank or pension provider

If you’ve been approached by a pension scammer and have handed over either your bank or pension details, you need to take action as soon as possible. Contacting your bank and pension provider directly may mean that they’re able to prevent any withdrawals or transfers from happening.

6. Report it

If you have been scammed or even if your just suspicious about some contact you’ve received, report it. The FCA, Action Fraud or The Pensions Advisory Service are all organisations you can turn to seek advice about the steps you should take.

If you have concerns about your pension, you can contact us today to discuss your needs and worries.