People in their 50s and 60s are being warned to watch out for cold callers promising heady returns for investing in hotels and properties in the Cape Verde Islands.
Typically, these cold calling ‘pension companies’ may describe themselves as a ‘trustee’, ‘consultant’ or an ‘independent advisor’ and offer exceptionally high returns for those willing to release and transfer their pension savings early before retirement.
The problem is these firms operate as unregulated collective investment schemes or UCIS so should not be promoting investments to the general public in the UK.
UCIS are risky products and as the Financial Conduct Authority (FCA) doesn’t regulate them you won’t be able to access the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.
So as the firms are not regulated or qualified to give financial advice you will be putting your pension at risk if you choose to transfer it into a scheme like this.
Other signs it's a scam
As well as being an UCIS, Action Fraud says there are other signs these investments are dodgy.
It knows of some victims who have signed documents that authorise a limited company to be set up using their personal details, including a Small Self-Administered Scheme (SSAS). This is a type of employer-sponsored defined contribution workplace pension that gives the trustee additional investment flexibility.
While SSAS accounts and limited companies are needed for a legitimate scheme to work, Action Fraud says the fact victims aren’t aware this will happen suggests the scheme may not have been properly explained, making it more likely fraud is taking place.
What to do if you get a call
Action Fraud says if you’re approached to get involved with an investment scheme like this you should be very wary.
You should ask the caller to explain the risks and growth rates and make sure you fully understand before transferring your pension.
You should also check whether the pension arrangement company is registered with the Financial Conduct Authority (FCA). You can do this using the FCA register online.
But essentially, if an offer sounds too good to be true it probably is and you should steer well clear.
Tips to avoid a pension scam
Sadly recent research from Citizens Advice reveals that almost nine in 10 people miss common warning signs of a pension scam.
Action Fraud has 10 tips to help you avoid falling victim.
1. Be wary of cold calls and unsolicited texts or emails claiming to be from Pension Wise or other government-backed bodies.
2. Check out every detail for yourself and don’t just sign up because a friend has recommended an investment.
3. Make sure your advisor is FCA approved and registered on the FCA website.
4. Check the FCA’s list of known scams on scamsmart to see if there has been any warnings on the deal being offered to you.
5. Steer clear of overseas investment deals in hotels, vineyards and the like where your money is all in one place and therefore more at risk.
6. Don’t be duped by ‘guaranteed’ returns or professional looking websites. When it comes to investments returns can rarely be guaranteed and anyone can set up a slick website nowadays.
7. Don’t be rushed into a decision take your time to make the checks you need to.
8. If you are 50 or over and have a defined contribution pension talk to Pension Wise to talk through your retirement options.
9. Ask The Pensions Advisory Service for help if you have doubts. You can call them on 0300 123 1047 or visit the TPAS website.
10. Contact your pension provider and call Action Fraud on 0300 123 2040 if you think you’ve been scammed, they might be able to stop the transfer.