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Top three watchwords used by pension scammers revealed

Paloma Kubiak
Written By:
Paloma Kubiak

A campaign group has revealed the most common buzzwords used by pension scammers to dupe victims out of thousands of pounds.

‘Legal loophole’, ‘free’ and ‘sophisticated investor’ top the list of watchwords to listen out for if you’re approached by a pension liberation firm, according to ACA Pension Life, a campaign group which helps scam victims.

The organisation represents members of 13 dodgy pension liberation schemes who have collectively lost more than £2bn.

The group has seen a spike in the number of people falling victim to pension scammers since the government introduced its pension freedom reforms last April, allowing over 55s to access their entire pension pots.

According to ACA Pension Life, the three phrases which should set alarm bells ringing are:

  • ‘Legal loophole’ – if anyone tells you there is a ‘legal loophole’ that allows you to access part or all of your pension before the age of 55, and that there will be no tax to pay, they’re lying.
  • ‘Sophisticated investor’ – if anyone tells you you’re a ‘sophisticated investor’ and should be investing your pension in assets which are ‘not traditionally available,’ red flags should be hoisted.
  • ‘Free’ – if you’re told you can transfer your pension free of charge, make sure you find out exactly what the long-term charges entail.  There is no such thing as ‘free’.

Those duped lose their entire lifetime savings

ACA Pension Life’s Chairman, Angela Brooks, said: “Every year millions of people become victims of pension scammers, many of them to skilful conmen who persuade them to ‘liberate’ their pensions.

“The majority of those who are duped by the liberation scammers lose their entire lifetime savings and then face mountainous debts plus tax demands of 55 per cent from HMRC.

“It is important to inform the public on how to recognise a scam to prevent more people losing their hard earned retirement savings.

“Of course, there are other tactics and warning signs, but these three phrases are amongst the most common and the most effective ways used by fraudsters to entice people into handing over their life savings.”

Authorities’ efforts to prevent pension liberation scams

ACA Pension Life says there are several initiatives currently in operation including the Pension Regulator’s (tPR) Scorpion campaign, the Financial Conduct Authority’s (FCA) ScamSmart campaign, and the government’s Project Bloom, but it adds these aren’t effective enough.

Last month ACA Pension Life released a statement calling on the government to set up an independent, specialist task force and said it must insist HMRC stops registering pension schemes “without due diligence” and must insist tPR stops registering occupational schemes “without due diligence”, as well as calling on the FCA to look at the weakness of its regulation.