Top tips for protecting yourself from pension scams

The FCA and the Pensions Regulator have warned that five million pension savers could be at risk from scams.

What are pension scams?

Simply put, a pension scam is when someone tries to con you out of your pension money. With people over age 55 now having greater access to their pension pot, it is an issue on the rise. Recent research* has revealed that nearly one in ten of those over 55 fear they have been targeted by suspected scammers since the launch of pension freedoms in 2015. Scams will often start with someone contacting you unexpectedly to discuss:

• An investment or other business opportunity that you’ve not spoken to them about before
• Accessing your pension money before you turn 55
• The ways that you can invest your pension savings

According to Citizen’s Advice, some 10.9 million unsolicited pension calls and messages are made each year. Cold calls about your pension are illegal and likely to be fraudulent.

Pension scammers are becoming more sophisticated in their approach. As such, these types of scams are increasingly more difficult to spot. Our specialist financial advisers suggest five top tips to help protect yourself against pension scams.

Protect yourself from pension scams: top tips

1. Say no to cold callers

Unwanted and unexpected phone calls, texts or emails about your pension are usually always scams. Scammers will often claim they are from Pension Wise or other government-backed bodies in order to sound more convincing. But these organisations would never phone or text to offer a pension review. If you do receive a call like this, don’t be embarrassed to say no and hang up the phone.

Scammers may also target you by post. If you are contacted this way, beware of phoning any premium-rate numbers (beginning 09) that are mentioned in the letter. They can cost up to £4 per minute to call.

2. Look out for deals that are ‘too good to be true’

Be cautious of anyone offering unregulated investments with ‘guaranteed high returns’, free pension reviews, early access to cash before the age of 55 and exotic sounding investments like hotels, vineyards or other overseas ventures. Similarly, be wary of deals where your money is all in one place – and therefore more at risk. The FCA’s Scamsmart website is a useful tool for finding out if the deal you’re being offered is a known scam, or if it has the hallmarks of a scam.

Worryingly, nearly a quarter (23%) of the 45-65 year olds questioned in the recent research said they would be likely to pursue these exotic opportunities if they were offered to them.

Don’t be rushed into making a decision that sounds too good to be true, or feel pressured by offers that have a time limit. There are a number of known cases where scammers have gone as far as sending a courier to people’s door to wait while they sign documents to really apply the pressure. It’s important not to feel intimidated into making a split-second decision; take your time to make all the checks you need – even if this means turning down what seems like an ‘amazing deal’.

3. Check the FCA register

Scammers will sometimes pretend to be qualified financial advisers, and they can appear very credible. But if they are not regulated, you may not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme should things go wrong. Don’t be fooled by smart websites or brochures – professional-looking marketing materials do not always warrant a company’s authenticity.

If you’re ever in doubt, you can check whether the firm the adviser represents is registered by searching on the FCA website. This tool also lets you see if the firm the adviser represents is authorised to give advice specifically on pensions.

4. Trust your own judgement – not your friends!

There are a number of cases where people have been conned by pension scams simply because they were recommended to them by a trustworthy friend. But your friend may be the unknowing victim of a scam themselves. With some types of schemes, it can sometimes be years before someone discovers they’ve been scammed. Fraudsters can be extremely convincing; even if you consider your friend to be financially savvy, it’s still important to carry out your own checks.

5. Take action fast

If you have reason to believe you’ve been scammed, act immediately. Even if you’ve already agreed to something that you now feel uncertain about, you should get in contact with your pension provider as soon as possible. In some instances, they may be able to stop a transfer that hasn’t taken place yet.

You should also report the scam as soon as you can. This helps prevent future victims from being defrauded of their savings. The research showed that nearly half (49%) of those approached who had been the victim of a scam said they did not report their concerns because they did not know how or who to report the scammers to. If you think you have been targeted, call Action Fraud on 0300 123 2040, or use their online reporting tool.

Always seek professional advice

Pension scams, sadly, are on the rise; it’s more important than ever to work with a financial adviser you trust. At George Square Financial Management, we are committed to providing ethical and professional pensions advice and have adopted the pension transfer Gold Standard – a mark of quality, trust and expertise in pension transfer advice.