Flexible-access drawdown
What are pension scams?
Pension scams are designed to encourage you to invest your savings into schemes that look legitimate, but actually line the pockets of criminal fraudsters. Your hard-earned pension fund could be the target of financial scams when you’re planning how to put your savings to use for retirement.
With pension scams on the rise and with new ways to target vulnerable investors, we’ve got a range of support and advice to help you keep your money safe and to give you peace of mind when it comes to securing a financial future.
Why are pension scams dangerous?
Pension scams can have devastating, long-lasting consequences. Scammers often lure victims with the promise of easy money, but in the end, individuals may lose all or part of their pension savings so learning how to protect yourself is vital.
Difficult to recover funds – Once the money is gone, it’s often nearly impossible to recover as fraudsters operate all over the world, making them extremely difficult to trace.
Lower returns – Scammers will convince victims to opt into high-risk investments or transfer money into fraudulent accounts, resulting in the loss of part or all of their savings.
Tax penalties – Many victims receive penalties as scams commonly promote early access to savings before the legal age requirements (aged 55).
Significant emotional distress – Worries of the future, a new lack of security and the stress of attempting to recover lost funds can have a huge impact on mental health and lead to feeling betrayed and struggling to trust legitimate companies moving forward.
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Types of pension scams
Cold Calls
Criminals come across as overly confident and persuasive. They will offer a deal with unrealistic opportunities, such as high returns.
Unsolicited Emails
These high-pressure emails are designed to mimic legitimate companies. They promote one-off
limited deals and exclusive benefits which actively don’t exist.
Fake Investment Schemes
The most common schemes involve cryptocurrency and overseas property that
claim to lead to high interest rates and extra financial gain.
Early Access Schemes
They promise access prior to the legal age (55) which leads to tax bills and loss of savings.
Pension Transfer Schemes
By moving money to other accounts, you will not receive the promised return rates, and these sites have little to no fraud protection.
Phishing
This is designed to steal user information such as bank or personal details, often included in email scams.
Pension Loan Schemes
This encourages a pension exchange for a loan with fixed terms that they cannot opt-out of.
How to spot a scam
When it comes to pension scams, there are some tell-tale signs that the person on the other end isn’t who they say they are. Here are some important signs to look out for:
Remember, if it sounds too good to be true, it probably is. If someone claims they can offer you an income that is significantly higher than any other provider can, be cautious! Sometimes this is possible, but always check first.
A ban on cold calling anyone about their pension was put in place in January 2019. So, be wary if you’re approached by phone call, text message, email, or even in-person without your prior permission (i.e. you filled in an online form or asked for a callback beforehand).
Scammers may try to rush you into making decisions quickly and pressure you into giving personal bank details over the phone.
Look out for clues in their contact details. Scammers will often have mobile numbers or PO box addresses on their websites or business cards.
How to protect yourself against pension scams
Never Share Information
Legitimate organisations will not request your bank or personal details outside of basic contact details, e.g. phone number or email address.
Research Pension Providers
Research well-known pension providers and make sure to check that offers are reasonable and legal.
Check Company Registration
Always ensure that the companyou’re dealing with is registered with a recognised regulatory body, like the Financial Conduct Authority (FCA) in the UK. You can check this online.
Don’t rush decisions
Take your time in making decisions about your financial future and goals. Here’s why genuine advice matters
Stay Alert
Be wary of scam emails/phone calls – does it all sounds too good to be true?
Always Report Scam Activity
Always report suspicous activity to local authorities such as Action Fraud
or the Financial Conduct Authority ScamSmart.
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