You may well have seen the headlines that victims lost an average of £91k each in pension scams last year. Worryingly, in a recent survey, 32% of pension holders aged 45-65 said they were unsure how to verify if they were speaking to a genuine pensions adviser. Scammers are becoming increasingly sophisticated. They can be articulate and sound highly knowledgeable. They will have designed seemingly attractive offers to try and persuade you to transfer your pension pot or release funds from it, which they will then invest in high-risk investments like overseas property, renewable energy bonds or forestry – or simply steal it directly.
As a result, the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have launched a joint advertising campaign to highlight what to look out for.
Be wary if you’re contacted out of the blue
Cold calling was found to be the most common approach employed by fraudsters so be on your guard if you receive an unexpected offer regarding your pension. In all likelihood, it will be a scam. In particular, exercise caution if you‘re offered a free pension review. The ban on cold calling for pensions will help with this but it is still currently under consultation due to the complexity of the issues – at least it has already come into force for PPI and personal injury.
Make sure you know who you’re dealing with
Check the Financial Services Register (www.register.fca.org.uk) to make sure that anyone offering you advice or other financial services is FCA-authorised. This ensures that you will have access to the Financial Ombudsman or Financial Services Compensation scheme if things go wrong.
Avoid being rushed or pressured into making a decision
Do all the checks you’d normally carry out regarding anything to do with your finances. Don’t be tempted to take any shortcuts for fear of losing out on an ‘amazing deal’. If something sounds too good to be true it probably is. Remember, nothing is guaranteed so if you’re promised guaranteed high returns, alarm bells should start ringing, especially if they are pressurising you to act quickly. Another tell-tale sign that it’s not a legitimate offer is if they offer you access to your pension before the age of 55.
Get impartial information and advice
There are various reputable sources you can go to for help and guidance. The Pensions Advisory Service (TPAS) (www.pensionsadvisoryservice.org.uk) provides impartial information and advice. If you’re over 50 and have a defined contribution (DC) pension, Pension Wise (www.pensionwise.gov.uk) offers pre-booked appointments to talk through your retirement options. Since this article was published, both of these services have since been combined into the government’s new financial guidance service, MoneyHelper.
Or consult a financial adviser, such as ourselves, to discuss the best option for your personal circumstances but always make sure they are regulated by the FCA. If you do suspect a scam, hang up and report it to the FCA on 0800 111 6768 or to Action Fraud on 0300 123 2040.