How to protect yourself from pension scams

There's been a 146% increase in pension fraud losses since the introduction of pension freedoms last year. Here's how you can protect your savings.

Love Money
Last updated: 4 April 2018 - 6.18pm

At least £13.3 million was stolen from pension savings last year, according to new figures.

In 2015, fraud losses from pensions shot up by 146% thanks to the introduction of pension freedoms, which make it easier to access retirement savings.

This is only part of the picture too, as the loss figures from the City of London Police don’t cover fraud that results in money being moved out of a pension scheme and into a different investment vehicle.

“Judging by this data, the post-freedoms pension fraud spike was worse than we had previously feared, and yet the Government continues to sit on its hands when it comes to taking meaningful action to deter scammers,” says Tom Selby, senior analyst at investment platform AJ Bell.

“More than £40m of pension fraud losses have been reported to City of London Police since May 2013, while estimates of total losses UK-wide from pension-related fraud – including investments – run into the hundreds of millions.

"This does untold damage to both the victims whose long-term savings are decimated, and to the reputation of pensions as a whole.”

[Related story: What needs to be done to protect us from online fraud?]

Call to ban cold callers

A petition is currently asking for the Government to ban pensions cold calling as part of an attempt to clamp down on pension fraud. So far it has attracted 2,000 signatures.

“A broad coalition of observers, from former pensions minister Baroness Ros Altman to advisers and providers, agree banning cold calling could make a real difference in the fight against pension fraud,” adds Selby.

But, until the Government takes action to crack down on pension fraud it is up to you to protect your own retirement savings. Here’s 10 steps to guard your pension from thieves.

1. Don’t trust cold callers

Many pension scams start with an out-of-the-blue phone call, email or text often offering you a free pension review. Do not respond to these approaches. Hang up on cold callers.

If you want advice about your pension or a review contact Pension Wise, Citizen’s Advice, or make an appointment with an Independent Financial Advisor – you can find one at unbiased.co.uk.

2. Check everything

A lot of people have fallen victim to a scam because it was ‘recommended by a friend’.

Don’t rely on a friend’s tips do your own homework to make sure it is above board.

[Related story:Opinion: why financial advertising should be a lot more serious] 

3. Check up on your financial adviser

Criminals will pose as financial advisers in order to part you from your savings.

Before you discuss your finances with an adviser make sure they are registered with the Financial Conduct Authority (FCA).

Pension scams: how to stay safe (image: Shutterstock)

4. Check if it’s a known scam

Visit the FCA’s Scamsmart website to check if the deal you are being offered is on its list of known scams.

5. Avoid overseas investment deals

A well-known scam is to convince you to move your pension into an unregulated overseas investment such as a hotel, vineyard or overseas building project.

This puts all your money in one place and therefore most at risk. Never agree to investing your money overseas in unregulated projects.

6. Don’t fall for ‘guaranteed’ returns or fancy websites

There is no such thing as a guaranteed return when it comes to investments.

Don’t assume something is credible just because it looks flashy with impressive brochures or websites – these days anyone can pull together a smart website or paperwork.

Make sure you question everything – no matter how credible it may seem.

[Related story: New investment trust hoping to lure long-term investors]

7. Don’t be rushed

Scammers will try to pressure you into making a mistake by telling you the offer is ‘time limited’ or by sending a courier to your door to wait while you sign documents.

Don’t be pressured, take your time to check everything even if it means you have to turn down the deal.

Pension scams: how to stay safe (image: Shutterstock)

8. Talk to Pension Wise

If you are over 50 and have a defined contribution pension you can talk to the government’s Pension Wise scheme for advice on your retirement options.

9. Call The Pensions Advisory Service

You can call the Pensions Advisory Service for help with your retirement savings. The number is 0300 123 1047.

10. Report potential scams

If you think you may have been the victim of a scam, or have been contacted by scammers, report it to your pension provider and the police via Action Fraud.

Contact your pension provider immediately as they may be able to stop a transfer if it hasn’t taken place yet.

You can call Action Fraud on 0300 123 2040.

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