Tactics used by pension scammers which could put five million savers at risk

Five million pension savers could be susceptible to the common tactics used by scammers to steal retirement savings, research suggests.

Two-fifths (42%) of 45 to 65-year-olds with a pension could end up putting themselves at risk, according to a survey released by the Financial Conduct Authority (FCA) and the Pensions Regulator (TPR).

Presented with six scam scenarios, they said they would act in one or more ways which could potentially leave them exposed to fraud.

This could equate to five million people being susceptible to pension scams if the survey findings were projected across the UK.

Pension cold calls, free pension reviews, claims of guaranteed high returns, exotic investments, “time-limited offers”, and promises of early access to cash can all be warning signs of a scam.

But they could tempt savers into risking their retirement income, the poll of more than 2,000 people found.

Victims of pension fraud reported in 2018 that they had lost an average of £82,000.

People who said they were actively looking for ways to boost their retirement income were particularly likely to take risks which could draw them into a scam, the survey found.

Our three top tips for being a #ScamSmart investor https://t.co/ozft6lyJMx pic.twitter.com/oqsJpLMmcc

— Financial Conduct Authority (@TheFCA) December 7, 2016

When faced with six common scam tactics, the survey results found:

1. Nearly a quarter (23%) of people would pursue an offer of high returns in either overseas properties, renewable energy bonds, forestry, storage units or biofuels, even though these are high-risk investments and unlikely to be suitable for pension savings.

2. The same proportion (23%) would engage with a cold call from a company asking to discuss their pension plans.

3. Nearly a fifth (17%) would be interested in a company that offered to get them early access to their pension pot.

4. One in seven (13%) would pursue an offer guaranteeing high returns of 11% on their pension savings.

5. One in 10 (10%) would take up a free pension review from a company they had never dealt with before.

6. One in 14 (7%) would agree to a time-limited offer from a company which offered to send a courier to sign the paperwork immediately.

Pensions and Financial Inclusion Minister Guy Opperman said: “Last year’s pension scams awareness campaign prevented hundreds of people from losing as much as £34 million, and I’m backing this year’s effort to be bigger and better as we build a generation of savvy savers.”

Nicola Parish, executive director of frontline regulation at TPR, said people are left “devastated” by pension scams, and Mark Steward, executive director of enforcement and market oversight at the FCA, advised: “Check you are dealing with an FCA-authorised firm.”

Here are some tips from the regulators to protect yourself from pension scams:

– Reject unexpected pension offers whether made online, on social media or by phone.

– Check who you are 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.

– Do not be rushed or pressured into making any decision about your pension – consider getting impartial information and advice.

More information about avoiding scams is available at www.fca.org.uk/scamsmart.