Last year, we wrote an article on the £120 pension scam, which affected thousands of people nationwide and was under investigation by the Serious Fraud Squad. Pension scams are still hitting the headlines, with a growing number of people falling victim to a variety of dangerous schemes. In this article, we provide some advice and useful guidance to help protect you from unscrupulous fraudsters:
Protect your savings from scammers
Fraudsters are using various methods to access people’s savings including pretending to be from the government, promising an amazing deal, or persistent cold calling. Age UK has reported an increase in the number of older people being affected – read their guidance.
Typically, fraudsters will tend to offer extremely high returns, as much as 8% in some cases. They will claim to know about tax-free loopholes and will use terms such as ‘loans’, ‘saving advance’ or ‘cashback’ from your pension. They may suggest you transfer all your savings into a single investment, pressure you into making a quick decision and express urgency for your signature to approve the transaction. Fraudsters are very adept at selling techniques; they may suggest ‘new’, ‘creative’ or ‘overseas’ investment opportunities – for example, in our previous pension scams article, there was a scheme whereby people were being persuaded to invest their entire pension savings into self-storage units and never seeing their money again.
If it sounds too good to be true, then it probably is!
Never feel pressured into parting with your hard-earned savings. We recommend always seeking professional advice from a trusted financial firm before you consider transferring any part of your pension and committing to any large transactions. Always thoroughly research the company offering you pension investments: the Financial Conduct Authority (FCA) has a register of authorised firms and individuals to help you check whether a company or person has the right credentials and insurance to advise you on your pension plan. It’s also worth checking their list of unauthorised firms and individuals. Plus, the FCA has some good advice on their website to protect people from pension scams – read more…
Bogus “pension liberation” schemes exploit “pension freedoms”
Since the 2015 “pension freedoms”, pension scams have been on the rise due to the ability for the over-55s to draw from their pensions before they retire. As a result, many older people are being targeted and lured into dodgy schemes. Thousands of people have lost their life savings when they realise there are no returns for their investment, and then find they cannot get their money out of the schemes. If you are approached out of the blue by a cold caller promising to ‘free’ you from your pension, be very, very wary.
Below is a list of the most common pension scams to watch out for:
- early pension release (before you’re 55)
- get-rich-quick, Ponzi and pyramid schemes
- restricted US shares, share, bond and boiler room scams
- binary options, carbon credit trading, rare earth metals, graphene
- land banking, overseas property and crop schemes
- unauthorised forex (FX) trading and brokerage firms
- unregulated investment products
The Pensions Regulator has also produced some helpful guidance to protect people from scammers – see their Pension Scams video.
Are you concerned about your pension? Do you have a final salary pension scheme? Download our pension guide for more information. We also have some general advice on retirement planning – please visit our Big Life Events – Retirement page.
If you are concerned about pension scams, or you have been affected by any aspect of this article, please get in touch to speak to one of our financial planners. We will be more than happy to advise you on suitable ways to protect your pension and help you plan safely for your retirement.
