Those approaching pension access age of 55 are increasingly being caught in a perfect storm, cast adrift in an ocean patrolled by hostile sharks, all prowling for the opportunity to separate prospective pensioners from their pension savings. Pension scams are increasingly sophisticated – and you’re a target!
Imagine the scenario – you have worked hard all your life and have accumulated a reasonable pension pot that you hope will keep you in moderate prosperity when you retire in a few years time. You’ve heard about the 2015 pension rule changes but, with a few years left before you retire you decide to look into it all nearer the time.
Out of the blue comes a phone call from someone claiming to be from Pension Wise, the Government’s advisory body on Pension freedoms. They explain that they are contacting all those coming up to retirement to explain their options under the new freedoms – one of which is the opportunity to access your pension prior to your official retirement age and invest it in funds that will ensure a growing income. In addition you can take a ‘lump sum bonus’ that you can use for a holiday or to pay off a mortgage.
The caller offers you a free pension review from a Government approved financial adviser to explore your options. He goes on to explain that the Government is offering free advice because so many people have fallen victim to spammers who take all of your money , leaving you with a large tax bill and huge fees.
You consider yourself pretty street wise, having reached 55 without falling prey to any African email scams, phishing attacks on your online bank account or a multitude of other attempts to part you from your money – and besides, you wholeheartedly agree with the Government doing something about it – so you agree a time for the free Government approved pension review and start to wonder where you could go on holiday with that bonus lump sum.
And the scammer puts the phone down and adds you to their list of potential pension scam victims – a list that has so far resulted in pensioners being separated from around £1 billion of their hard earned cash.
Scammers are increasingly sophisticated in their approach and use clever behavioural psychology techniques to draw you into their web. Backed up by impressive brochures, professional looking web sites with perfect spelling, crested headed notepaper and expensive sounding Knightsbridge addresses they seek to portray themselves as establishment wealth managers, eager to help you invest your pension wisely and profitably.
But as Minister for Pensions, Baroness Ros Altmann made clear in a recent statement: “The criminals behind this illegal activity often lay a sophisticated trap complete with glossy brochures and professional websites that make them look highly credible. Their aim is to catch you off your guard so they can steal your hard-earned savings.”
Over 55s are also now being targeted. Only today, the Citizens Advice Bureau said their staff, who run the face to face elements of the Government’s Pension Wise service had seen a rise in pension scams targeted at the over 55s. These focus on persuading those who have already taken their pension pots to invest in dodgy and highly risky investments such as fine wine and overseas property – approaches often preceded by an offer of a free ‘investment review’.
Back in the days of Government information campaigns we could have expected to be bombarded with TV adverts, advising us of the changes and warning us about the predators after our money, but in the era of the internet and national austerity we have to rely upon online content. This infographic is an admirable initiative by the Pensions Regulator to summarise what you need to be aware of to avoid being stung by a scammer.
There are of course Government organisations whose job it is to provide consumer advice on the new pension rules and stop you falling into the jaws of the scammers. All reports suggest that they are excellent in helping you to understand your options – once you have found out who they are and how to contact them of course. One thing is certain, they will never contact you out of the blue – you have to make the initial contact.
These are the key organisations that you should consider talking to if you are worried about fraud or for general advice on your pension:
- The Financial Conduct Authority. If you think you have been scammed or that someone has tried to scam you, contact the FCA’s Consumer Helpline on 0800 111 6768 or ring 0300 500 0597 to check out a company you suspect may be a scammer.
- Action Fraud. If you have accepted an offer or lost money to investment fraud, raise the alarm by calling Action Fraud on 0300 123 2040 or go to actionfraud.police.uk.
- The Pensions Advisory Service (TPAS). Any questions about your Pension and advice on scams. Ring them on 0300 123 1047
- Pension Wise A free and impartial government service about your defined contribution pension options. Ring PensionWise on 0300 330 1001
- The Pension Regulator. Mainly about workplace pensions but good advice on fraud and scams.
We have a whole section on Pension Scams and Fraud in the Pensions Blog, together with a helpful video from the Pensions Regulator. It contains a raft of advice to avoid becoming a fraud victim, but I reckon the best piece of advice is:
Before you sign anything, call The Pensions Advisory Service on 0300 123 1047
Generic Guidance, not Advice. If you are looking for help on how to invest your retirement pot, it is important to realise that none of these organisations offer personalised advice on what to invest in – you need to speak to a qualified and regulated financial adviser to get that sort of advice. Although, after an hour’s consultation with one of their representatives, industry figures such as Nic Cicutti from InspiredMoney are concerned that the recipient may feel that they have actually received formal advice, and may then go on to make unwise investment decisions based solely upon the generic guidance received.
You can of course get some general investment ideas from the Pensions Blog, but for detailed advice specific to your own situation you really need to speak to an adviser. You will have to pay for that advice, and it may well seem to be a large amount up front, but if you want a secure and hopefully growing income for perhaps 30 years of retirement it is surely an investment worth making.
If you don’t know or use an IFA at the moment, and very few people in this situation will, you can find one local to you on one of the three main websites listing advisers – more details on our Independent Financial Adviser (IFA) page.
And now – over to you!
Have you heard of any sneaky pension scams? Or been approached by a scammer cold calling you? If so, we’d love to hear about it in the comments section or in the Forum. There are no prizes for the best cautionary tale, but we will certainly feature it in a follow up post if you are happy for us to do so.