Both the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have joined forces to raise the alarm after new research suggests that 46 per cent of pension savers in London – which would equate at least 586,000 people, are potentially at risk of falling for at least one of six common tactics used by pension scammers.
Guy Opperman, Minister for Pensions and Financial Inclusion said: “Pensions are one of the largest and most important investments we’ll ever make and robbing someone of their retirement is nothing short of despicable.
“We know we can beat these callous crooks, because getting the message out there does work.
“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.”
In the UK around 60 per cent of retirement income is targeted by scammers who target people who are looking to increase their funds.
Fraudsters use tactics to try and get money from pension savings – some of which include cold calling, free pension reviews, claims of guaranteed high returns, exotic investments, time-limited offers, and promising people access to their cash before the age of 55.
Honey Langcaster-James, a psychologist added: “Most people are confident in their ability to avoid being scammed.
“We tend to assume that it would never happen to us because we think we’d notice something if it wasn’t right.
“But even the smartest and savviest among us can become victims of crimes and we do often have a ‘blind spot’ – sophisticated scammers take advantage of this and use powerful psychological techniques to build trust and rapport and ultimately to influence our behaviour.”
Fraudsters may also tempt the public with the promise of high returns in investments such as overseas property, renewable energy bonds, forestry, storage units or biofuels.
However, these types of investments are deemed as being high-risk and not suitable for pension savings.
Despite this, 33 per cent of Londoners aged 45 to 65, questioned said they would pursue these unusual opportunities, if offered to them.
Helping savers to access their pensions early also proved to be a persuasive scam tactic.
Over 28 per cent of 45 to 54 of pensioners from London showed an interest in offers from companies who falsely claimed they could help them access their money at an earlier stage.
Moreover, accessing a pension before the age of 55 will result in a large tax bill for the saver.
In 2018, victims of pension fraud reported that they had lost an average of £82, 000.
Regulators are joining forces to urge pension savers to be ScamSmart and to check who they are dealing with before making any decision on their pension.
In 2018, the ScamSmart campaign resulted in more than 370 people being warned about unauthorised firms.
This year’s campaign is currently running on TV, radio and online.
Nicola Parish, Executive Director of Frontline Regulation, TPR, said: “Scammers don’t care who they prey on or how many lives they wreck.
“If you ignore the warning signs you put yourself at risk of losing your savings.
“Victims are left devastated by what has happened to them. Make sure neither you nor any of your loved ones have to go through that ordeal.”
The regulators recommend four simple steps to protect yourself from pension scams:
1. Reject unexpected pension offers whether made online, on social media or over the phone
2. Check who you’re 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
3. Don’t be rushed or pressured into making any decision about your pension
4. Consider getting impartial information and advice
For more information or to take part in the ScamSmart quiz visit: Here