New research from the City Watchdog shows the financially savvy are as vulnerable as anyone else to pension-focused scams.
New research from the Financial Conduct Authority and The Pension Regulator suggests that 42% of people investing for retirement – amounting to five million people across the UK – are at risk of being conned out of their pension by scammers using a range of tactics.
Alarmingly for Money Observer readers, the research shows that those who consider themselves to be financially astute are just as likely to lose money to these schemes.
Kate Smith, head of pensions at Aegon, comments: “This is a fresh warning that no one is immune from scammers. There’s no point dismissing this as an issue that only happens to other people, being duped by pension scammers can happen to anyone.”
Particularly at risk are retirees who are actively looking to enhance their retirement income, with the chance of being ripped off rising to 60%.
Among the most dangerous common scams are offers of exotic investment opportunities promising high returns. These include overseas property developments, renewable energy bonds, storage units and biofuels.
Almost a quarter (23%) of 45-65 year olds with pensions said they would be interested in such an offer, despite the high risks attached to this kind of investment.
A similar number said they would engage with a cold call from a company wanting to discuss their pension plan – even though pension cold-calling was banned earlier this year after years of delay. Moreover, 17% said they’d be keen to talk to a caller offering early access to their pension pot, a move that could all too easily leave them with an unexpected tax bill.
Other tricks successfully used include the offer of guaranteed high pension returns (13% of respondents said they would follow it up), free pension reviews (10%) and time-limited offers (7%).
As Quilter head of retirement Jon Greer warns: “Spotting a pension scam can be tricky, and it is absolutely critical for savers to have their guard up when approached with an offer to move their pension to a new scheme, transfer into unusual assets promising outlandish returns, or take advantage of a scheme offering early access.”
However, there are various precautions to take if you are approached by anyone offering such a scheme.
- Think rationally: if a proposal sounds too good to be true, it almost certainly is. “Any scheme promising bumper returns is to be treated with caution,” warns Greer.
- Check the credentials of any company wanting you to change your pension arrangments on the FCA Register https://register.fca.org.uk/ or call the FCA contact centre on 0800 111 6768 to see whether it is authorised by the FCA.
- Check also the FCA ScamSmart website, which lists schemes already identified as potential scams, but don’t assume if it’s not on that list that a scheme is above-board.
- Don’t be rushed or pressured into any decision regarding your pension.
- Greer recommends contacting an independent financial adviser or the Pensions Advisory Service about any major change to your pension plans. “They will help guide you and, most importantly, will be able to point out when something looks too good to be true.”
- If you are contacted out of the blue then be particularly cautious – remember, cold-calling has been banned by the government. “If you do get a call you’re unsure about, the safest thing to do is put the phone down,” says Greer.
- Test how well your scam antennae are working by taking the FCA’s new scam quiz here.