High inflation, soaring prices and rising interest rates have put increased financial pressure on households.

“Sadly, tough periods are boom times for scammers, as it’s easier to exploit people who are struggling,” explains Dean Butler, managing director for retail direct at Standard Life.

Earlier this month, the Pensions Regulator (TPR) launched a new scam-fighting strategy amid the cost-of-living crisis and warned that savers could be lured into parting with their retirement pots to pay for household bills and other day-to-day costs.

Criminals often try to con people out of their pension savings because there are usually big sums of money involved and the rules around pensions are complex.

These scams can involve a victim being tricked into handing over their pension pot to a non-existent or high-risk scheme or they may be persuaded by the criminal to release some or all of their money.

Scammers can target people at any age and they often prey on a person’s anxiety, promising extra money or higher or guaranteed returns. Victims are also often told they can access their pension savings early through a loan or loophole.

Victims are often conned into thinking they can put the money into another investment which will make them a bigger return and Butler warns that “if you fall victim to a pension scam, it’s likely you’ll find it very difficult to get your money back.”

Pension scam warning signs

There are common things to look out for to lower the risk of being a victim to a pension scam including the following points, as shared by Standard Life.

1. Out of the blue: pension scams are usually emails, letters, or direct messages on social media platforms which come out of the blue.
2. Scammers pretend to be experts: these criminals will often pretend to be a pensions adviser, from a government agency or from a genuine financial firm.
3. Key phrases: if you see the words “free pension review”, “pension liberation”, “loan”, “savings advance” or “cashback”, it could be a scam.
4. ‘Guaranteed’ returns: pension scams may offer guaranteed or higher returns from unusual, unregulated or overseas investments which have no consumer protection
5. Pressured sales tactics: if the message is making you feel anxious or is pressing you to act quickly, with phrases like “time limited” or “one-off” it may be a scam.
6. Early pension access: criminals often try to tell victims they can access their pension before the age of 55.
7. Complicated investments: victims may be persuaded to put their money into complicated investment structures such as those which require money to be paid for the pension scheme and a bond.

How to avoid a pension scam

Many pension scams are hard to spot and the messages can look very similar from those sent out by genuine firms. But there are some extra precautions you can take to avoid being a victim. They include the following:

• Don’t be rushed into anything: if you’re pressured into making a quick decision, there may be something wrong so always take your time to do some research
• Don’t take their word for it: do your own research online, using sources other than the ones the scammer has recommended
• Visit the FCA’s ScamSmart website: it has guidance and help on how to protect yourself against scams
• Check the FCA’s Financial Services Register: if the person or firm isn’t listed there, you won’t have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service.

If you’ve been approached by a criminal, you can report it to the FCA online or on 0800 111 6768. If you’ve lost money to a scam, you can report it to Action Fraud online or on 0300 123 2040.