Pension scammers’ top targets are men and Londoners: Here’s how to avoid falling victim

Men are more likely to be plagued by pension scammers than women, and Londoners suffer the highest incidence rate in the country, new research reveals.

Overall, 13 per cent of adults have been contacted by fraudsters attempting to steal their retirement pots, but this jumps to 35 per cent among those living in the UK capital.

Some 28 per cent of people with a pension are worried about falling victim to a pension scam, according to the survey by Scottish Widows.

Pension fraud: Men are more likely to be plagued by scammers than women

A ban on unscrupulous sharks using cold calling to trick people out of their life savings was introduced in 2019.

This targeted the scammers and unregulated firms which try to persuade people to transfer money into unsuitable high-risk investments with stiff fees attached.

Campaigners anticipated that crooks would simply switch to new ruses – like calling from overseas to get around the UK law – but argued that raising public awareness about the ban would put more people on their guard.

Scottish Widows found men were more likely to be targeted by fraudsters, with 18 per cent receiving suspicious approaches compared to 7 per cent of women.

Out of those contacted, one in 20 said the scam was successful, and most victims took action including contacting their pension provider, the police or Action Fraud –  but 4 per cent said they did nothing.

‘Our research found that over half of respondents would contact their pension provider if they were subject to a pension scam but it’s vital people contact the Action Fraud team, the UK’s national reporting centre for fraud and cybercrime, as the first port of call,’ says Robert Cochran, senior corporate pension specialist at Scottish Widows.

 Unfortunately, we’ve seen an increase in the number of pension scams taking place in the UK, especially as scammers use situations like the pandemic or rising living costs to take advantage of people

‘Unfortunately, we’ve seen an increase in the number of pension scams taking place in the UK, especially as scammers use situations like the pandemic or rising living costs to take advantage of people,’ he says.

‘This presents a threat to people’s retirement savings as an entire pension fund could be taken.

‘More often than not, a pension scam starts with an unexpected phone call, email or text from someone claiming to represent a financial services firm or government body, but the tactics being used are becoming increasingly sophisticated.’

Scottish Widows surveyed 5,000 adults, weighted to be representative of the population, in late summer this year.

How to protect yourself against pension scammers

Scottish Widows says people should be on alert for the following signs.

1. You’re contacted out of the blue – If you receive unsolicited cold calls, texts or emails from an individual or firm about your pension they’re unlikely to be legitimate.

Luckily, half of Brits said an unsolicited approach would be a pension scam red flag.

When discussing your pension, ensure you speak to your pension provider, a regulated financial adviser or a government body using the contact details on their website, before making any decisions.

2. You receive an offer that seems too good to be true – Schemes that offer exceptionally high rates of returns are usually very high-risk, and fully guaranteed returns are rare.

You should also be wary and suspicious about language such as ‘pension liberation’, ‘loophole’, ‘free pension review’, ‘limited time offer’ or ‘one-off investment’ as they can be the lead-in to a potential scam.

3. You are offered access to your pension before the age of 55 – Only in very specific circumstances will you be able to access your pension before the age of 55.

Participating in a scheme that provides access to your pension before then will result in severe tax penalties and the potential loss of your funds.

4. You’re expected to invest in an unusual asset – Pensions are usually linked to funds that invest in shares, fixed interest securities and cash. 

The assets you’re ultimately invested in should be familiar and easy to locate information on. 

Although it’s possible to invest in more specialised assets such as commercial property through a ‘self-invested’ style pension, this is not a requirement to grow your pension pot.

5. You’re asked to withdraw money first – The money contributed towards your pension is already invested in a range of funds or investments that your pension provider makes available. 

This ensures your returns are tax-free and well protected. You should never have to withdraw funds from your pension to invest them; they’re invested by the pension scheme in the funds that you select.

6. You’re told to act quickly for the best deal – Decisions about your retirement fund should not be rushed and any offers of immediate investment for a one-time offer can be risky. 

You should take your time and obtain suitable advice and guidance about managing your pension properly.

7. You are given suspicious contact details – Other factors that would cause people to think they’re being targeted by pension scammers are if a firm wouldn’t allow you to call them back, and when contact details are only a mobile phone number or PO box.

STEVE WEBB ANSWERS YOUR PENSION QUESTIONS

       

8. You are told of tax incentives – Someone or a company claims to know of tax loopholes or promises extra tax savings.

Red flags for pension transfer scams

A free pension scam predictor tool is being offered online by an arm of financial wellbeing specialist People-tech.

The firm says there are 20 straightforward questions relating to the tactics that a pension scammer might use to coerce people into transferring their pension, and you don’t need to give your personal details to participate.

At the end you are given a list of the potential red flags based on the answers you gave and a percentage score on the likelihood of your pension transfer being a scam.

The People-tech website, called Help & Advice, says the tool should only be used as guide and it is people’s own responsibility to assess the viability of any pension transfer they are looking to make.

Its analysis of data from more than 1,400 assessments completed over the summer threw up red flags in nearly a quarter of cases.

And it found a phone call is the most popular way for an unsolicited approach to be made, despite the pension cold call ban.

Among those receiving a call, 9 per cent were pressured into making a quick decision and 16 per cent were told that the adviser could achieve higher than average investment returns.

If concerns are identified, people are given instructions including to halt the transfer, contact their pension scheme, stop any payment, report the matter to Action Fraud on 0300 123 2040 or at actionfraud.police.uk, and report it to the Financial Conduct Authority on 0800 111 6768 or using the scam reporting form at fca.org.uk.

Saq Hussain founded People-tech in 2021 after a financial career including jobs at PwC’s pension arm, Towers Willis Watson and KPMG.

He says the pension assessment tool was developed to help people considering doing a transfer to do a ‘sense check’ and work out whether it could be a scam.

Hussain says of latest scam trends: ‘Our analysis shows a clear and significant increase from the start of the year, an indication perhaps of how the cost-of-living crisis might be a route in for scammers.

‘Even though cold calling has been banned, people are still being approached in this way.’

Analysis of pension transfer assessments (Source: People-tech)

Analysis of pension transfer assessments (Source: People-tech)

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