Scams Awareness month 2016
This year we’re supporting scams awareness month which falls July 2016 . The aim of this month is to raise awareness about all the different types of scams people come up against, giving helpful tips on how to avoid them and where to go for help. This week the focus is on online crimes, including investment and pension scams. Unfortunately for pension savers, pension scams have featured in later life saving for many years and remain an ever present issue for current savers.
For most people, their pension(s) provision is one of their largest financial assets, which like anything valuable, can be a tempting targeted for an opportunistic scammer. Here at The Pensions Advisory Service, we see pension scams in all their complicated forms, but the common signs of a scam are:
- “Free” pension reviews, often offered as part of an apparent “Government initiative”.
This is a false offer. The pension guidance public services, including Pension Wise, that are available to you free of charge require you to make the initial contact and will never make unsolicited calls.
- Offer of investments, usually promising guaranteed investment returns of 6% - 8% per annum, these are often in non-standard investments such as luxury products, high-risk or speculative investments or space and storage.
Remember, it’s always best to spread your pension savings over a number of investments to diversify the risk, and it’s generally not a good idea to “put all your eggs in one basket”.
- The contact is often made by an “introducer” and they are often not regulated by the Financial Conduct Authority and therefore normal consumer protections do not apply.
- Savers are pressured to rush into signing a letter of authority so that they can collect information on your pensions.
Pensions are a long-term savings vehicle and are not suited to very short-term decision-making.
- They may even appear to be helpful and offer to collect your information via courier - this is a pressure tactic to get you to hand over your information quickly
- Scammers also offer to access your pension fund before the age of 55, through ‘legal loop holes’.
This is not allowed, accessing your fund before 55 could lose you your pension fund, but you could also find yourself with a high tax charge of 55% from HMRC for making an ‘unauthorised payment’.
Michelle Cracknell, Chief Executive of The Pensions Advisory Service said ‘pension scams continue to plague the pensions landscape, destroying people’s lives and their plans for the future. We receive many calls to our service from people who’ve been offered pension reviews via cold callers. Positively, we’ve seen an increase in people coming to us to check what they are being offered is legitimate, indicating an increased awareness of pension scams, but the threat remains prevalent in pension saving. We would strongly urge anyone who is approached out of the blue or aren’t sure about what they’re being offered to check with us first, we can explain all of the typical scam warning signs and provide next steps.’
While successful investigations into pension scams take place regularly, cases are investigated subject to the availability of intelligence and evidence. Unfortunately, the prospect of recovering a lost pension fund involved in scam activity is very unlikely. Anyone who finds themselves in this position may wish to think about their future financial situation and seek guidance from our pensions specialists to discuss their next steps.
To find out more information on pension scams you can visit the dedicated website provided by The Pensions Regulator.
If you’d like to talk to our team about scams or any other pension related question, there are a number of ways to get in touch.
Remember, if it sounds too good to be true, it probably is