Hundreds of pension scam victims lose £91,000 each and two are conned out of £1million nest eggs

Pension scam victims are losing an average of £91,000 each in a wave of fraud sparked by reforms made by former chancellor George Osborne.

At least £23million was stolen from 253 savers after they fell prey to criminals in 2017, official figures show.

Two victims lost nest eggs worth more than £1million.

The figures are thought to be just the tip of the iceberg, with the real number far higher as many cases go unreported.

It comes after con artists spotted an opportunity in the so-called Pension Freedom reforms introduced by Mr Osborne, which give retirees more control over what they do with their savings.

Independent MP Frank Field, chairman of the pension committee, said: ‘What this shows is that the defences against fraud haven’t kept pace with the extension of the freedoms, and the Government should act accordingly. It’s a tragedy for the individuals concerned.’

Introduced in 2015, the pension freedom changes gave savers much more flexibility over how to use their retirement pot. Before then, the vast majority spent their savings on a guaranteed income for life called an annuity.

A £91,000 pot would buy the typical pensioner an annuity of around £3,200 a year, rising in line with inflation. A £1million pot would buy around £35,000 a year according to Tom McPhail, a pension expert at savings firm Hargreaves Lansdown.

But pensioners are now free to invest their money in whatever they like, or even take it out as cash in a lump sum.

Campaigners fear this flexibility has opened the floodgates for fraudsters promoting bogus investments.

These typically promise huge returns through unusual schemes such as hotel developments in the Caribbean or farms to grow truffles.

But in reality, victims’ money is never invested and is spent by the scammers instead.

Independent MP Frank Field said defences against fraud ‘haven’t kept pace with the extension of the freedoms, and the Government should act accordingly’

When this happens, very little money is typically recovered and the savers stand to lose everything. Victims are often middle-class workers targeted specifically because they have a large pension pot. And many are so embarrassed they do not report what has happened.

Sir Steve Webb, a former pensions minister who now works for investment firm Royal London, said: ‘The scammers are incredibly clever and it’s not a sign of stupidity to be taken in – it could happen to all of us.’

Vultures also tend to swoop on any firms where there is uncertainty over pension pots.

Firms targeted workers at a steel plant in Port Talbot, South Wales, when they were told their retirement scheme was changing. Dozens of workers were persuaded to shift their life savings into high-risk schemes. Pauline Smith, Director of Action Fraud, said: ‘These statistics prove that the consequences of falling victim to a pension scam can be devastating.’

Retirement schemes are overseen by The Pensions Regulator, which has pledged to get tough on scammers. And pension cold calling has now been banned, with firms fined up to £500,000 if they break the rules.

The Mail warned about the risk of possible scams when pension freedoms were introduced. On the day reforms came into force, we warned that fewer than 300 advisers had been hired to help retirees navigate the pitfalls, sparking fears of a wave of fraud.

How scammers fleeced 245 victims out of £13.7million

Director ban: Camilla Austin was banned from serving as a director for four years

A gang run by former bankrupt David Austin conned 245 victims out of £13.7million by touting fake investments, regulators have said.

The scammers’ company, Friendly Pensions used high-pressure sales tactics to strong-arm savers into investing in 11 fake schemes, including a truffle farm.

Their nest eggs were used to line the pockets of the trustees, with more than £10.3million shunted into firms owned or controlled by ringleader Mr Austin.

Austin’s daughter, 25-year-old Camilla, has been banned from serving as a director for four years for her involvement in the scheme.

One couple from Hereford was persuaded to hand over more than £78,000 in 2013. Another victim, from South Wales, was contacted by text after giving up work to care for his seriously ill partner. He handed over almost £50,000 to be invested in a Caribbean holiday complex.

Austin, 53, has been banned from serving as a pension trustee and disqualified from working as a company director for 12 years. The Pensions Regulator has now launched a criminal investigation.

No arrests have been made.