Three ways to protect your pension from scammers
Since 2015, the Insolvency Service has applied to the courts to wind up 24 companies which were found to misuse pensions.
For example, in some instances individuals were convinced to invest in unregulated schemes, while in other cases pension trustees did not carry out their duties properly.
The Insolvency Service estimates there have been close to 3,750 victims connected to the 24 companies that were closed down, including individuals and businesses, having made £202m worth of contributions.
Victims of pension scams last year lost an average of £91,000 each to fraudsters, according to ScamSmart. Common tactics include cold-calls, offers of free pension reviews and promises of high rates of return.
In one case, four directors of companies involved in the misuse of £57m worth of pension funds were banned for a total of 34 years. Introducer firms cold-called people, inviting them to transfer their pension pots into occupational pension schemes.
However, the introducers misled clients about their expertise and offered guaranteed returns they were unable to deliver. Members’ funds were then largely invested in unregulated investments in storage units, which did not yield the level of returns promised to members.
How to protect your pension
This January the government introduced a pension cold calling ban, which should go some way towards halting this practice. However, the Insolvency Service points out that savers must remain vigilant against potential scammers.
Here are three steps to stop you from becoming the target of a pension scam:
- Be wary of calls out of the blue. Get the company’s name and establish their credentials using the FCA’s Financial Services Register.
- Seek financial guidance or advice before changing your pension arrangements or making investments
- Don’t be rushed or pressured into making any decision about your pension and be wary of promised returns that sound too good to be true