You’ve saved into your pension for years: don’t let someone take it from you in seconds.
Scams are designed to encourage you to invest your savings into schemes that look legitimate – but actually line the pockets of unscrupulous fraudsters. Your hard-earned pension fund could be the target of financial scams when you’re planning how to put your savings to use.
This article will show you how to identify and avoid pension scams, and how an independent financial adviser can help you to protect your pension.
What is a pension scam?
A pension scam is set up by people who want to fraudulently take your money.
People pose as entrepreneurs offering unique investments, for example, and use the financial information you give them to take your pension pot for themselves. Once they have your funds in their account, it’s incredibly difficult – and sometimes impossible – to get it back.
Scams have significantly increased since April 2015 to take advantage of the pension freedoms market shakeup. People have more choice with their money now, such as easier access to large lump sum payments. Unfortunately, this makes pension scams an appealing scheme for fraudsters.
According to the Financial Conduct Authority, people caught up into a pension scam lose an average of £91,000. The good news is that you can learn how to spot these scams to avoid becoming a victim and losing your savings.
How to spot a pension scam
Pension scams appear in several forms but they have some common themes to watch out for.
The number one thing to look out for is being contacted by individuals or companies that you haven’t been in touch with first.
Never give your personal or financial information to someone who has contacted you out of the blue, no matter how genuine they sound.
If you’re approached by someone offering a ‘unique one-off investment opportunity’, or a financial offer that seems too good to be true, it may be a scam. Ask for the business details and check their registration on the Financial Conduct Authority register. If they aren’t listed, don’t contact them again.
Since January 2019 a ban has been in place that prevents anyone from calling you about your pension unless you’ve given them permission to do so. You may have agreed in writing or by filling out an online form; if you’ve not done this then hang up immediately.
If you may have asked for a company to get in touch, but you’re not sure, ask for a contact number to return their call. Scammers will either pressure you to stay on the line or give you a number that doesn’t connect when you try to call it.
Other common signs of a scam include:
• High-pressure conversations asking you to hand over financial details
• Offers of a ‘free pension review’ that requires you to transfer money
• Email-only conversations with no phone calls or letters
• Sales pitches with urgent ‘limited time only’ agreements
• Favourable rates significantly higher than the rest of the market
• Requests for money transfers into overseas accounts
• Offers to release money from your pension if you’re under 55.
You may also come across websites that look like they’re run by a familiar provider. However, any contact forms or links on legitimate websites will never ask you for your bank details or personal information (beyond basic contact details). The URL at the top of any webpage will also have https:// at the start, too. Any page without the ‘s’ is not secure and could be a scam.
How to find a reputable financial adviser
With scams so prevalent, it’s hard to know where to start when you’re looking for pension and investment advice.
The first place to check is that a company is FCA regulated. This means that they must stick to strict rules about financial advice and how they handle your sensitive data.
Using an FCA-regulated company also gives you extra protection as a consumer. You’ll be covered by the Financial Services Compensation Scheme and the Financial Ombudsman Service if anything were to go wrong based on the advice the company gives you.
You can also check independent third-party review sites to find a reputable company that other customers would recommend. These sites make sure the reviews aren’t simply made up on a company website: real customers leave their independent feedback, and the company is verified by the review website, too.
If you’re still worried about pension scams, the FCA ‘ScamSmart’ guide will help you learn more about avoiding the fraudsters.