With the cost of living these days eating into thousands of UK householders’ savings, it’s more important than ever to protect your pension.
After all, there are plenty of fraudsters out there keen to get their hands on your lucrative pension pot. And there are a number of sophisticated schemes they’ve devised to help them do just that. Fear not though, in this article we’ll tell you how to spot a fraudster a mile away and what to do about it when your suspicions are aroused.
What are the scams?
The majority of scams are in the form of ‘an investment opportunity’ for which they’ll want you to hand over a lump sum or even your entire pension. This is usually described as a ‘one-off, not to be missed deal’ or it may be presented to you as having ‘guaranteed returns.’
Then again, it could be that you’re advised to act quickly to avoid missing out on the deal. Or, you are promised access to your pension pot before you turn 55 years of age. It may be too that they are offering advice on a ‘tax loophole.’ Most scams promise to deliver ‘unbelievable returns’ and, certainly, you shouldn’t believe them. Because the likelihood is you’ll probably never see your cash again.
Since 2019 it has been illegal for an individual or company to contact you about your pension – unless you’ve asked them to first. As a result, many scammers try to get around this by presenting an official looking website and asking you to fill in your details in order to secure ‘a great investment opportunity’ etc. You can usually tell if a website is suspect when they don’t have a contact address (just a PO box) and the only way you can contact them is via a mobile (rather than a landline) phone.
You can always tell if a company is legitimate by checking to see if they are registered with the Financial Conduct Authority (FCA). If not, they may appear on the Authority’s ‘warning list.’
How to spot a scammer
If you’ve been contacted ‘out the blue’ then that should certainly be a red flag. They’re breaking the law for starters. If the caller, or email isn’t offering an investment straight off, then it could be a ‘pension review’ or ‘no-obligation consultation’ to help you maximise your pension investment.
Watch out too for the terms ‘government initiative’ or ‘tax saving/incentive’ in relation to an investment. These are regularly used to persuade you to part with some – or all - of your pension pot.
Some scammers pretend to be legitimate by claiming they are part of Pension Wise. This is run by the government and is a legitimate service – as such, they will never ‘cold call’ you to offer a pension review.
It may be that you’re contacted via social media and asked to download software such as Zoom or Microsoft Teams. The scammer then asks you to share your screen. Doing so gives them access to your bank accounts.
What to do if you suspect it’s a scam
If, indeed, you smell a rat then simply put the phone down, ignore the email and don’t reply to the text. You can also report it to the Action Fraud website. Or, if it’s easier, call them on 0300 123 2040.
If you’re not sure about a potential investment, there are checks you can make. If you plan on transferring cash to a particular scheme, for instance, ask your current scheme to check the HMRC status of the new one. If it’s unauthorised don’t go ahead. Even if it’s authorised, the investment it plans to make with your pension money may be unregulated and you could lose it all.
Do your own checks too; read online reviews and check news articles for previous mentions of the company and scheme. If you are considering investing in a scheme then always ask for independent financial advice from a company regulated by the FCA. Check out Money Helper’s Retirement Adviser Directory.
You’ve worked hard for your pension – make sure it’s yours to spend and not some fraudsters.
