FCA warning: are you at risk from a pensions scam?

Scams and fraud come in various forms, and fraudsters are now targeting people’s retirement savings. New research suggests that 42% of pension savers – around 5 million people across the UK – are at risk of falling for a pension scammer’s tactics.

In 2018, victims of pension fraud reported that they had lost an average of £82,000. To combat this, the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) are working together to protect the public from pension scammers.

What tactics are pension scammers using?

Scammers are always looking for new ways to take advantage of people, but there are six common tactics to be aware of. They include:

  1. Cold calls about your pension: 23% of 45-65 year old pension savers would engage with a company who calls them unexpectedly to discuss their pension. These types of cold calls have been illegal since January 2019.
  • Free pension reviews: 10% of 45-65 year old pension savers would agree to a pension review from a company they’ve never dealt with before.
  • Claims of guaranteed high returns on investing your pension. 13% of 45-65 year old pension savers would be tempted by potentially high returns.
  • Exotic investments, such as overseas properties and renewable energy bonds. Such investments come with a high risk.
  • Time-limited offers. This puts pressure on the victim to make a quick decision. The scammers sometimes offer to send a courier with paperwork to be signed immediately.
  • Early access to your pension pot before the age of 55. Accessing your pension too early can result in an expensive tax bill. 

Make sure you’re ‘ScamSmart’

Most of us are confident that we could spot a scam straight away, but even the most financially savvy people can be caught out.

You can find out how ‘ScamSmart’ you are by taking this short quiz on the FCA website. It’ll teach you how to spot and avoid the six common pension scam tactics.

Be sure to share the quiz with others so that more people can be kept safe from pension scams.

The FCA also has an active warning list that can tell you if this company is behaving dubiously. If you’re unsure about anything that the company’s offering, please check it against the warning list.

How else can I protect myself from pension scams?

While these findings may be daunting, you can protect yourself from pension scammers by following these four simple steps:

  1. Reject unexpected pension offers whether made online, on social media or over the phone.
  1. Before making any changes to your pension, always check who you’re dealing with.  You can search for the company  on the FCA Register or call the FCA contact centre on 0800 111 6768. If they don’t appear on the register then they’re not authorised and you won’t be protected from any action they take with your pension.
  1. Don’t be rushed or pressured into making any decision about your pension. A legitimate pensions advisor will give you time to consider your options. Remember, if it sounds too good to be true, it usually is.
  1. Consider getting impartial information and advice on your pension. The Pensions Advisory Service provides free and impartial information and guidance to help you make an informed decision. If you’re aged 50 or over you can contact Pension Wise,  provided by the government and Money and Pensions Service (MAPS).

I’ve dealt with / I’m a victim of a pension scammer. What should I do?

If you suspect that you’ve been contacted by a pension scammer, you can report them to the FCA via the form on their website. Please provide as much detail as possible.

If you’ve lost money to a pension scammer, please report it to Action Fraud as soon as possible. You can do this by calling 0300 123 2040 or filling in the form on their website.

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