Pension scams: average victim loses £91,000
And a worrying number of savers cannot identify the tactics used by fraudsters, according to city regulators.
Cold calling is currently the most common method used to initiate pension fraud.
Scammers then often offer a ‘free pension review’ and guarantee high returns while downplaying risks.
They also push unusual or overseas investments such as hotels and forestry and put people under pressure to make a quick decision, for example with limited time offers.
Many claim to be able to unlock money from a pension, which is normally only possible from age 55.
It is believed only a minority of pension scams are ever reported.
The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have launched a joint ScamSmart campaign to raise awareness of pension scams and tactics. They are targeting people aged 45 and 65 who are the most at risk.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “The size of individual pension pots makes pensions savings an attractive target for fraudsters. That’s why we’re urging anyone who is thinking about transferring their pension to check who they are dealing with and only use firms authorised by the FCA.”
Guy Opperman, minister for pensions and financial inclusion, said: “Pension scams are devastating for hardworking people and can rob them of the retirement they planned.
“I would urge savers to always exercise caution and seek independent guidance or advice before making important financial decisions.
Tom Selby, senior analyst at retirement firm AJ Bell, said: “Scammers continue to hound retirees on a daily basis, devising increasingly complex and convincing methods to deceive unwary savers into handing over their hard-earned pensions.
“Since April 2015, when the pension freedoms were introduced, fraud activity has increasingly and unsurprisingly targeted over 55s, often luring people to part with their retirement pot by promising huge returns over a short period of time.
“Once the scammers have your money, however, they often disappear, leaving a trail of devastation in their wake.”
He said there is no sign of scam activity reducing with £51m of investment fraud reported to City of London Police from April to June 2018, up from £30m in the same period last year.
“While the forthcoming Government ban on pensions cold-calling should mark the start of the fightback against fraudsters, increasing awareness of the dangers of scams is necessary to enable people to protect themselves,” Selby said.
Four steps to protect yourself from pension scams:
- Reject unexpected pension offers whether made online, on social media or over the phone.
- Check who you’re dealing with before changing your pension arrangements. Check the FCA Register or call the FCA contact centre on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA.
- Don’t be rushed or pressured into making any decision about your pension
- Consider getting impartial information and advice.
If you think you’ve been a victim of a pension scam, report it. Visit www.fca.org.uk/scamsmart to find out more.