The Pensions Regulator has recently warned that more than £30m has been lost to pension scams since 2017, according to reports filed with Action Fraud. However, this figure is probably significantly higher as most savers don’t know how much is in their pension pots.
Yesterday, (November 10th) The Pensions Regulator has launched a campaign which commits to ensuring that savers are aware of scam tactics. The pledge from the regulator is to raise standards in anti-scam practice. Pension providers will agree to regularly warn members of the risk of scams and will encourage those looking to enter drawdown to set up a guidance appointment with The Pensions Advisory Service.
The campaign is certainly welcome news to those of us in the industry who feel extremely aggrieved at the lack of action to date by both the Financial Conduct Authority and The Pensions Advisory Service against pension scams.
How to Spot a Pension Scam
- Any cold call in relation to your pensions or investments should immediately raise suspicion. Unsolicited contact by phone, email, text message or in person in relation to pensions has been banned since January 2019.
- Scammers use clever tactics that appeal to our emotional side, or fear of missing out including time – limited offers or pension investments that have “high guaranteed returns” or “high rates of return with low risk”. They might also recommend exotic investments such as overseas property, forestry, renewable energy bonds, storage units or carbon credits.
- Any claim from a company that they can help you access your pension before the age of 55 is a red flag. They sometimes refer to this as “Pension Liberation” or “Pension Loans”. Only in very rare cases is this actually possible, usually due to poor health or through the arrangement of a formal pension loan back with a sponsoring employer.
- Any company claiming to know “tax loopholes” or promising to save extra tax on your pensions.
- The contact details on the company’s website is a PO Box Address and only mobile telephone numbers are available.
- Some scammers claim that they are part of the government – backed Pension Wise service by using “Guidance”, “Wise” or “Pension” in their company name.
How to check a Scammer
- Immediately reject any unsolicited visitors, calls, emails or text messages. Legitimate companies are banned from cold calling.
- Check the FCA Register of regulated companies, or the FCA warning list of known scammers. At the moment, the FCA Register does not show details of individual advisors, but this will be updated by April 2021.
- If you are considering an opportunity, seek independent advice from an FCA Regulated Firm.
What to do if you think you are being scammed
Firstly, contact your pension provider immediately. They might be able to prevent a transfer that hasn’t yet taken place. If you haven’t signed anything yet, don’t allow yourself to be rushed or forced into making a decision. Again, pressure to sign or time sensitive transactions are a huge red flag.
Secondly, report the details to Action Fraud on 0300 123 2040 or online at www.actionfraud.police.uk
If you are over 50 you should be able to have a free guidance session through Pension Wise, visit their website to find out more.
Thirdly, seek advice from a regulated company, we can usually spot a potential pension or investment scam from a mile away! You may be able to claim some compensation following a scam depending on how the advice was given.