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Typical pension scam loss doubles to £50k

Emma Lunn
Written By:
Emma Lunn

Figures from Action Fraud show the average pension scam loss so far this year has been £50,949, compared with £23,689 in 2020.

Between January and May this year, reported pension scam losses totalled £2,241,774, although many scams go unreported. Some individual savers lost as much as £500,000.

Research from the Financial Conduct Authority (FCA) found savers are significantly more likely to be fooled by scammers’ tactics online than they would face to face. The regulator is urging pension savers to “flip the context” if they are approached online regarding their pension by suggesting they imagine the offer had been made by a stranger in a pub.

The FCA found that just 1.1% of pension holders would take advice from a stranger, but 9.95% would accept financial advice such as a “free pension review” online.

Jon Greer, head of retirement policy at Quilter, said: “Most of us are hardwired to ignore the ‘get rich quick’ schemes we hear about in the pub, and we know to take any unsolicited face-to-face financial propositions with a pinch of salt. Yet when we go online, we are often lulled into a false sense of security and our instincts can go out the window.

“The FCA’s research suggests that all too often, people incorrectly assume they can trust what they see online to be genuine. They trust that because a pension ‘opportunity’ appears on a website or a search engine that it must be the real deal. Often, however, it is a scam.

“Spotting a pension scam can be tricky and it is absolutely critical for savers to have their guard up when approached with an offer to transfer into unusual assets promising outlandish returns, or take advantage of a scheme offering early access.”

Gareth Shaw, Which? head of money, said: “Fraudsters are using increasingly sophisticated techniques to trick consumers into handing over the pension savings they have built up over decades. Search engines like Google are awash with adverts for investment schemes promising returns far greater than the paltry rates on offer from most savings accounts – and they are often designed to look just like the websites of well-known financial firms.

“Because pension scams often start on the internet, online platforms must be given legal responsibility, through the Online Safety Bill, to identify, remove and prevent fake and fraudulent content, including adverts, from appearing on their sites in the first place.”