Pension scams are becoming more frequent and costing victims an average of £91,000. According to recent data from Action Fraud, more than £23m was lost to scammers in 2017.
Pension freedom has created many opportunities for scammers to target people approaching retirement with access to their retirement funds.
Pension scams in numbers
- A total of 253 victims reported to Action Fraud that they had lost more than £23m to pension scammers in 2017
- This works out at an average loss of £91,000 per victim
- The Financial Conduct Authority’s Financial Lives report suggested that 107,000 people aged 55 to 64 could potentially have been victims of pension scams last year
Too good to be true
The majority of people with the option to access their pension do not have a financial adviser, leaving them vulnerable to scammers because they can’t tell who is genuine and who isn’t.
Nick Moules, Head of Marketing at Wren Sterling says the old adages are especially relevant in these cases: “If something is too good to be true, it probably is. If someone asks you to transfer money to them over the phone or via email, don’t do it, however convincing they appear.
“The media has reported some gut-wrenching stories of people losing their retirement income just a few years before retirement, which means they have no time to recover their position and face working for many more years or a reduced quality of life in retirement. Working with an independent financial adviser gives you the assurance that they’re working in your best interests and you’re able to utilise proper channels if things don’t work out and you need to make a complaint.”
The government has indicated that the long overdue pension cold calling ban is due to come in later this year and the Financial Conduct Authority is releasing a series of TV adverts designed to reiterate warnings about scammers.
“Anything the authorities can do to raise awareness of this threat and the devastating impact a scam has on hard-working people should be encouraged. It doesn’t cost a thing to pick up the phone to an independent financial adviser and see if they can help you plan your retirement, so it’s an option worth taking to avoid the emotional and financial stress of being caught in a scam”, said Moules.
Tips for avoiding 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