The impact COVID-19 has had on pension savings and the fact that many household incomes are under extreme pressure means individuals are now at greater risk of falling for a scam.
The Pensions Regulator has reiterated its warnings about scams after Action Fraud announced that more that £5m has been lost to Fraud since February this year. Pension scams have been found to be one of the most common type of fraud with victims being tricked into taking money out of their pension, or even transferring it all to a scammer.
To help individuals avoid losing their pension to scams and fraudsters, WEALTH at work, a specialist provider of financial education and guidance in the workplace supported by regulated financial advice for individuals, highlights the common mistakes individuals make when falling for a scam:
“They looked so professional” – Scams look and sound legitimate, which is why people are hoodwinked. They often have very professional looking websites and literature. Whatever you are planning to do with your pensions money, check before you do anything that the company is registered with the Financial Conduct Authority (FCA).
“It was a once in a lifetime opportunity” – If an investment offers the opportunity of a lifetime, be very suspicious. If it seems too good to be true, it probably is.
“They seemed so friendly and knew so much about me” –The people that run pension scams are clever and may have been able to get hold of some of your personal details, not just about you, but your local area and interests. Don’t let their knowledge and feign friendliness catch you off guard and allow them to con you.
“If I didn’t decide quickly the opportunity would be lost” – Genuine advisers will never rush you to make a decision. Anything that talks about limited time offers is likely to be a scam. Always check with the FCA.
“They said they could help me to access my pension early” – Pensions can normally only be accessed after you reach 55, unless you have seriously ill health. In normal circumstances, if someone promises to release your pension early they are lying, and it is a scam. Make sure you know the facts to avoid the fraudsters.
“I didn’t know how to check them out” – If you are unsure always contact your employer if it relates to your pension at work, or The Pensions Advisory Service (TPAS) or Pension Wise for any other kind of pension.
“They kept contacting me and eventually I just gave in” – Scammers will use technology and try to contact individuals through various means such as social media, texts, telephone calls and emails. If you are in doubt, ignore it and hang up the phone or delete the message. Your phone company should be able to help by blocking any offending numbers and email providers can help you to block emails from specific senders. Beware of what you share through social media and check that your privacy settings are as secure as possible.
“I didn’t report the scam straight away” – If you think you are being scammed, you must contact TPAS immediately. Not only may they be able to help you, but they will be able to help others from falling for the same scam.
Jonathan Watts-Lay, Director, WEALTH at work, comments; “It seems that scamming is rife, particularly with those aged 55 and over, as they have access to significant amounts of cash through their pension. Often the reason that people get scammed is because they are offered an amazing return, something that they believe they can’t get anywhere else. The crucial thing to remember is that scams don’t look like scams, and can be difficult to spot. Whatever investment you are planning to make, it is important to check out the company with the FCA first. If they haven’t heard of them you will have no place to go if they turn out to be fraudsters.”
Visit the FCA’s ScamSmart website to find out more.
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There are many advantages to choosing to use income drawdown to access your pension, one of the main ones is being able to access your assets in the most tax efficient manner.
16th June 2020
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