Pension Scams Becoming More Widespread
Do you think you would be able to spot the signs of a pension scam?
It’s an increasingly important question as recent research by the Financial Conduct Authority (FCA) identified that a total of £2,241,774 has been reportedly lost to pension scams in the first five months of this year. Sadly this figure may be even higher, as some victims of pensions scams may be reluctant to report that they have been scammed or do not realise they have been scammed until years later.
And it’s not just bigger pension pots being targeted. Losses range from under £1,000 to as much as £500,000. The average loss this year was £50,949, according to complaints filed with Action Fraud, which is more than double last year’s average (£23,689).
The FCA research also found that people are five times more likely to be interested in a free pension review offered online compared to one provided in their local pub.
But as Mark Steward, of the FCA explains, “Imagine a stranger in a pub offering free pension advice and then telling you to put those savings into something they were selling. It is difficult imagining anyone saying yes to that. It’s no different online. Whether you’re on social media or checking your emails, if someone offers you free pension advice, ‘flip the context’ and imagine them doing the same thing in real life.”
Referring back to our question, you may be one of the 68% of pension holders who believe they are confident in spotting a scam. But overconfidence is a risk factor in itself. So don’t let your guard down and always check any firm you are dealing with is FCA Authorised – and do this via the FCA’s own Financial Services Register rather than through links in emails.
The FCA highlighted five common warning signs of a pension scam:
- being offered a free pension review out of the blue
- being offered guaranteed higher returns
- being offered help to release cash from your pension, even though you are under 55
- high-pressure sales tactics – scammers may try to pressure you with ‘time-limited offers’ or send a courier to your door to wait while you sign documents
- unusual investments which tend to be unregulated and high-risk.
Some really helpful information on how to avoid pension and investment scams can be found on the FCA’s ScamSmart webpage.
Of course we have a team of dedicated professionals who are happy to discuss any pension concerns or queries you may have. And please, do make sure you check our credentials on the FCA register before giving us a call.