One third of people don’t recognise pension scams

New research shows the difficulties of spotting a pension scam as fraudsters get more sophisticated.

Many people struggle to spot pension scams, while fraudsters continue to employ more sophisticated tactics to part them from their money. New research from the Pensions and Lifetime Savings Association (PLSA) found that one third of people missed the most obvious pension scams.

Of some 2,000 respondents, 35 per cent did not suspect a scam in a scenario where ‘they were contacted by someone who is trying to get you to transfer your pension to an investment or scheme which seems too good to be true’. 

Less than half of respondents thought that a situation ‘when you speak to an adviser who tells you to take actions which you find out are not in your best interest’ could indicate a pension scam. 

Overall, the three most obvious potentially dangerous scenarios out of a shortlist of five were not identified by almost 30 per cent of respondents. 

James Walsh, policy lead for Engagement, EU and Regulation at the PLSA, comments: ‘Pension scams come in all shapes and sizes, as scammers become increasingly sophisticated. Whilst the Government’s ban on cold-calling is welcome, it is only part of the solution.’ 

But despite repeated calls from the pensions industry and the Work and Pensions Committee, the government has so far failed to set a date for the implementation of a pensions cold-calling ban.

‘The PLSA is calling on the Government to make urgent progress towards introducing an authorisation regime for pension schemes. That will reassure people that they are only dealing with legitimate providers,’ adds Walsh. 

Ben Gold, head of pension investment at Xafinity Punter Southall, says: ‘Unfortunately, the volume of scam activity is growing at a rapid rate. In our experience, a third of cases that our team identify as potential scams have an advice trail which is unclear, or involve IFAs who are either unauthorised or on our internal watch list.’ 

Cold-calling occurs in one in five cases that the Xafinity team identified as potential scams, and they are increasingly seeing scammers using LinkedIn to deceive targets. 

Another type of fraud observed by Gold involves ‘members being offered investment opportunities that provide guaranteed or specific investment returns’. 

Martin Tilley, director of technical services at Dentons Pension Management, says: ‘It is a sad state of affairs, but a reality that there will always be those who seek to scam money from those who have earned it, rather than earning it for themselves.’  

‘Despite numerous industry and regulatory campaigns, it is worrying that the PLSA figures identify such a large proportion of the population who are still uncertain about the means of identifying potential scams.’

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