Be alert of pension scammers


When your phone rings, do you immediately doubt the voice on the other end of the phone? According to a recent Citizens Advice report, over 2.4 million 55-64-year-olds have been contacted in the past year in a new surge of pension scams.

Have you received a call to tell you about a phenomenal investment opportunity, with a guaranteed return? Perhaps the person on the end of the phone has offered to review your pension free of charge? Or maybe they can simply give you early access to your pension before age of 55?

As Head of Pensions, I am all too familiar with the fact that pension scams are on the rise and constantly evolving. While the focus used to be primarily on liberation scams, designed to trick savers into thinking that they could access their pension pots before age 55 without penalty, there has now been a shift towards investment scams targeted at the over 55s.  The new Pension Freedoms give the over 55s the choice to access their defined contribution pensions savings in any way that suits them. But it also makes this  group a target for pension scammers, involving novel risky  investment scams which are often tied to offshore investment ‘opportunities’.

Top Tips for identifying a scammer

  1. Cold Callers should raise alarm bells. Try not to engage in conversation. The safest thing to do is to hang up.

  2. Always check the Financial Conduct Authority (FCA) online register if you doubt a company

  3. Check the FCA ScamSmart warning list for known investment scams

  4. Never feel pressurised into making a quick decision

  5. Always do the research. As always, if in doubt, use a regulated independent adviser. You can find one of these using the ‘unbiased adviser’ website

Scams often target two main audiences; the vulnerable and the financially savvy, often ‘over–confident’ investor. In order to tempt people in, these callers often offer high guaranteed returns or high-interest rates, in return for investing in high-risk, unusual, non-regulated investments such as overseas property, tropical rainforests, storage units or car parks. The returns rarely materialise and often the funds disappear and investors are unable to get their money back.

Not that kind of phishing…

There are a number of different kinds of scams that you could fall victim to. Phishing is the attempt by scammers to ‘phish’ for information and try to find out pension details, usernames, passwords and a variety of personal details.

There are a number of different scams out there, but what they have in common is that most start from a cold-call. A cold call is unexpected, from someone you don’t know and is often talking about an opportunity you previously hadn’t been interested in. Scammers will try approaches by phone, text, email or letter often offering free pension reviews or the opportunity to invest in high-risk investments. 

If something is described to you over the phone as a ‘once in a lifetime opportunity’, it might be the kind of opportunity that you are better off without.

How to avoid the pension scammers

The fool proof way of avoiding cold callers is to not answer the phone, but realistically that’s not very practical, so how do you avoid falling foul of potential scammers?

One way of stopping unwanted calls is to install call blocker technology on your phone, so you only pick up calls from people you know. Don’t respond to unsolicited texts or emails or use the unsubscribe option, as the scammers will then know they have a genuine phone number or email address and they will keep trying to contact you..  Do this and it could radically reduce your risks of being scammed out of your hard-earned pension.

Remember that your personal details belong to you and it’s important that you don’t ever feel pressured into any sharing private information.

I am certainly aware that there is a lack of knowledge out there and that people simply don’t recognise the signs of scams. As part of a recent Citizens Advice survey, a group of research participants was shown mock pension advice adverts. Almost nine in ten (88%) consumers selected a pension advice offer containing pension scam warning signs. 87% of consumers who identified themselves as being confident at spotting scams selected one of these offers.

As well as the informative ‘Too Good to be True?’ guide put together by Citizen’s Advice, The Pensions Regulator’s guide ‘Are you scammable or scamproof?’ highlights a number of ways to keep yourself scamfree.

If you have been targeted by someone you suspect is untrustworthy, the best thing to do is to report the scam to Action Fraud on 0300 123 2040, or online 24 hours a day. Stay up to date on social media by following @actionfrauduk on Twitter and the Action Fraud page on Facebook.