Spike in pension fraud since the introduction of pension freedoms in 2015.
Around one in 10 pension savers have been approached by pension scammers, according to research.
In a survey, carried out by Succession Wealth, of those aged over 50 and with pension plans around 10% had been approached by potential scammers, while 5% had lost money.
According to Mark Stokes, head of communications at Succession Wealth: “Our findings are very alarming and illustrate the potential scale of the problem that is pension scamming.
“Some of the people being targeted are vulnerable and more needs to be done to protect them. The Financial Conduct Authorities Scamsmart initiative is very helpful in this regard.”
Pension fraud has seen a spike since the introduction of pension freedoms in 2015. By allowing pensioners access to their pot to invest in other places, scammers have been able to convince some to invest in fraudulent investment schemes.
As we recently revealed, these scams have included trying to induce pensioners to invest in the supposedly booming market for burial plots to bitcoin and offshore bonds. According to the Succession Wealth survey, 42% of those who believed that been targeted by scammers were told about an investment scheme that promised high guaranteed returns.
According to government figures, in the first year of pension freedoms alone, around £19 million was lost to pension fraudsters, representing double the amount from the year before.
Similarly, earlier this year it will revealed that 24 different companies involved in pension fraud have been would up since 2015, representing 3,750 victims and £202 million of contributions.
The findings also shed light on the methods used by such scammers. According to the survey, 68% of people who believe they had been targeted by a pension scammer said they were contacted via the phone while 27% were contacted via email. Only 4% said they were visited by them in person.
In theory, pension scams will become less commonplace, thanks to the government’s implementation of a ban on cold-calling relating to pensions earlier this year. This means in effect that any phone-call that you receive from an unknown person or company, where they ask about your pension, is an illegal call.
The Treasury says that firms that breach the rules will face fines of up to £500,000.
Although the ban is a welcome one, it is worth pointing out that pension scam phone-calls will not stop entirely, as there are exemptions to the new law (for instance, calls from FCA-authorised firms are not banned); moreover, those calls that originate from abroad are outside the UK authority’s reach and will still inevitably continue.