7 Steps To Help Avoid Pension Scams

The Pension Regulator (TPR) and the Financial Conduct Authority (FCA) launched a ‘ScamSmart’ campaign across TV, radio, and the Internet, warning pension savers to be wary when it comes to potential fraud.

It comes on the back of research from the two regulators which discovered the average person who fell victim to a pension scam in 2017 lost a devastating £91,000 of their hard-earned retirement savings to fraudsters.

Suspicious Minds: Caution Pays When It Comes to Your Pension

Here are a range of tips and red flags to look out for that might indicate you’re at risk of falling into a pension scam and having fraudsters make off with your retirement savings. When you’re talking about something as important as your retirement future, it pays to be over cautious.

You’re particularly vulnerable if you’re in your 40s, 50s and 60s as scammers commonly target people in these age ranges. That’s who this new campaign is primarily aimed at.

Check the FCA Register

As mentioned, always check the credentials of any firm you’re considering dealing with on the FCA’s register of approved entities. If you can’t find them on there or, worse, they’re one of the known fraudsters on the FCA’s Warning List then steer clear.

Check the Company’s Other Details

Does the company have a physical address? Can you call them back at a time that’s convenient to you or are they unwilling to let you do so? Not having a registered address or a phone number that permits incoming calls is a huge red flag.

What Returns Are You Being Promised?

Are you being promised dizzyingly high returns on your pension savings? One way scammers often lure people in is by offering returns far out of the realm of the ordinary. Remember, if it sounds too good to be true, it probably is.

What Level of Risk is Claimed?

Alongside high returns, fraudsters may claim that this investment opportunity is “low-risk” or even “risk-free”. No investments are free from risk – values can always fall as well as rise and it’s important to remember this.

What Type of Investments Are Being Offered?

Criminals may target your retirement savings by offering to put them in ‘alternative’ investments, such as green projects or overseas opportunities (including hotels). Consider carefully the ramifications of doing so — such opportunities, if they exist at all beyond being a front for fraudsters, are often incredibly risky.

Are You Being Rushed?

With something as important as your retirement savings, you deserve sufficient time to think through your options.

Don’t be rushed, pushed or hurried on a warning that an opportunity is “time sensitive”. Some scammers have even sent couriers armed with paperwork to people’s houses to get them to sign on the dotted line even faster — avoid such situations at all costs.

Are You Being Offer Early / ‘Unlocked’ Access to Your Pension?

It’s vital to realise you can’t get access to your pension savings unless you’re at least 55, unless you’ve been diagnosed as terminally ill.

Don’t fall victim to anyone offering to ‘unlock’, ‘liberate’ or ‘free’ your pension before 55 — you’ll be met with a huge punitive tax bill if you access your pension early. Alternatively, it may just be an excuse for fraudsters to get their hands on your cash.