Throughout your working life, you’ll contribute a portion of your monthly salary into your pension savings. Unfortunately, there are people who target pension savings with scams.
According to figures from Action Fraud, 253 victims reported pension fraud in 2017 and £23 million was lost to pension scammers – an average of £91,000 per victim. But what are common pension scam tactics and what can you do to avoid them?
We talked to James Glover, spokesman for The Pensions Regulator, the UK’s regulator of workplace pension schemes, to get his tips on how to keep your pension savings safe from fraudsters and what to do if you suspect you’ve been scammed.
What are the most common pension scams?
‘There are a range of pension scams but the one we are currently trying to tackle is based around pension liberation,’ explains James.
‘These are ones where people are contacted, usually with a cold call, and offered things like a free pension review, an amazing limited-time offer, a great return on their investment or a tax-free advance on their pension – even if they’re not 55.’
The term ‘pension liberation’ is used to describe when scammers try to trick people into believing that they can withdraw a sum of their pension before the age of 55, which the government currently only allows during rare instances, such as terminal illness.
The fraudsters will play on the fact that they have discovered a legal loophole, which the High Court ruled doesn’t exist back in 2014.
‘As far as we’re concerned, if it’s a cold call about your pension, it’s a scam,’ adds James. ‘There’s no such thing as a free pension review and the offers talked about are usually exotic, and therefore unregulated.
‘There are some who will bolster their attempts to get you to sign up using flashy websites, creating a site with some domain around freeing up your pension. In some cases, they will even include some of the anti-scam messaging in there to try and make themselves look legitimate, but they aren’t.’