Pension scams hit £8m a month
Pension freedoms are providing more choice for savers but have also opened up the market to conmen and fraudsters who prey on the vulnerable and those hoping for early access to their pensions.
The latest City of London Police figures show that more than £8m was lost to pension liberation scams in the month of March, a record1.
Andrew Tully, pensions technical director, Retirement Advantage said: ‘Pension scammers are a modern day scourge, as reported fraud losses are counted in the millions. Pension freedoms are providing more choice for savers but have also opened up the market to conmen and fraudsters who prey on the vulnerable and those hoping for early access to their pensions. Unfortunately, the ban on cold calling, an important step in the right direction to clamp down on this abhorrent activity, has been shelved due to the snap general election. The sooner we can get this legislation back on the next government’s agenda the better.’
Retirement Advantage urges retirees to beware of:
1. An offer to help you access your pension savings before age 55. It is only possible to do this in rare situations, for instance if you are very ill, so be careful and always check with your pension provider.
2. A recommendation to take a large amount of money, or your whole pension pot, in a lump sum and invest it. There are significant tax implications if you take lots of your savings in one go, so check the tax position before you make any decisions.
3. Warnings that the deal is limited and you must act now. Choosing the right retirement income product(s) is a big decision and shouldn’t be done quickly or under pressure.
4. Being discouraged from seeking professional financial advice or talking to Pension Wise or The Pensions Advisory Service (TPAS). An adviser would be able to explain the rules and tax implications of different options and help you make the best choices for your personal circumstances, so be very suspicious if this is discouraged.
5. Contact by somebody who is not on the Financial Conduct Authority (FCA) Register. The Register is a public record of all the regulated firms and individuals in the financial services industry, including retirement income providers and investment companies (https://register.fca.org.uk/).