Pension scams skyrocket during the festive period – here’s how to spot them

2 December Reading Time: 5 minutes

The countdown to Christmas has begun! And while usually an occasion for goodwill, generosity, and spending time with loved ones, the festive period can come at a high cost for savers due to an upward spike in pension fraud.

With a flurry of spending commitments to keep track of due to festive shopping and activities, pension planners may not be paying as much attention as they should to suspicious emails or online interactions.

Moreover, combining the financial squeeze Britons across the county will be feeling due to the cost-of-living crisis and the societal pressures to spend more during the holidays presents the perfect opportunity for pension fraudsters to strike.

Scams are becoming more advanced each year, and even those that consider themselves ‘tech-savvy’ are at risk if they don’t take precautionary steps. Indeed, research from Action Fraud earlier this year reported that the average amount lost by pension scam victims in 2021 had doubled to £50,000 from around £23,700 the previous year.

The convenience and ease of the digital age means that there are vulnerabilities to be aware of. So, here are some common types of pension scams to watch out for -during the holidays and beyond.

‘Loan’ offers or promises of early pension access 

The idea of savings deals and accessing your money early is undoubtedly an attractive one on the surface. Having extra cash to hand is especially enticing when considering the acute challenges of the cost-of-living crisis, coupled with the high financial pressures of the festive period.

Fraudsters will often exploit people’s hunger for good deals and lack of knowledge by offering to help people below the age of 55 access their pensions. Generally speaking, pension planners can only take money from their funds when they are 55 or older, except in certain exceptional circumstances. Attempting to access one’s pension before 55 is highly risky as it can lead to hefty tax bills and withdrawal fees.

As such, it is vital that savers are wary of impromptu offers followed by demands for information.

Staying alert to cold-calls

It’s also important that savers are aware of some tell-tale signs: cold calls, as well as unsolicited text messages or emails, are usually a giveaway. In fact, unsolicited phone calls about pensions were banned in 2019 following an open consultation. The decision means that not only are cold calls illegal, but companies caught breaking the law can incur fines of up to £500,000.

As a result, if you receive a cold call about your pension, you are best advised not to share any information, hang up the phone and report the incident to relevant authorities if you have the capacity to do so.

Savers should be equally conscious of pension review scams, which target savers by offering free pension reviews – again, these fraudsters tend to operate by telephone calls, emails, text messages, and even advertisements on search engines.

However, these scammers are not to be trusted. Their aim is to persuade individuals to transfer their hard-saved pensions into high-risk schemes, where their pension funds are invested in unfamiliar investments. Scammers will make big claims about the returns and cash sums promised by such investments. Because some of these scams are promoted as ‘long-term investments’, it may even be years before an individual realises something is amiss.

Remaining diligent

The invention of high-pressure crises by scammers is an age-old tactic, but in the case of pensions as a big part of many people’s financial lives, it may be pretty easy to be swept up into panic if caught at the wrong moment.

If anybody claims to know information about you, alleges that you did something illegal, or claim to know the amount of money you have/have lost, you have likely been targeted by somebody intending to exploit you and your savings. Any legitimate company would not put you under pressure to make hasty decisions about such a vital part of your finances. Pension planners should never feel rushed into making any rash decisions about their pension or giving over their personal bank details – particularly over the phone.

Overall, the holidays are a time of increasing spending and pressure on finances which makes it more important than ever to be alert for potential threats. Protecting your pension is an important way to secure your present and your future, so If you wish to learn more you feel that you might have fallen prey to one of these scams, please do report it to the FCA using this website link


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