Apparently too much knowledge can indeed be a dangerous thing as the more highly educated a person is, the more likely they are to fall for a pension scam, according to research from the UK’s Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).
Analysis from the regulators’ joint ScamSmart campaign indicates that people with a university degree are more susceptible to common scam tactics than those without a degree. For example, those with a university degree are 40% more likely to accept a free pension review from a company they’ve never dealt with before, and 21% are more likely to take up the offer of early access to their pension pot.
“Scams can happen to anyone,” Nicola Parish, TPR’s executive director of frontline regulation, said in a release. “Pension scammers ruin lives, stealing away decades of savings with professional-looking websites, ‘expert’ advice and an easy manner making it tough to spot the fraud.”
The research also found that overconfidence could lead to savers missing the signs of a scam. Although 63% of those surveyed said they are confident about making decisions regarding their pension, the same percentage said they would trust someone offering pensions advice out of the blue. The regulators caution that is one of the telltale warning signs of a scam.
The analysis from the regulators also showed how devastatingly fast someone could lose a lifetime of retirement savings. They said that while it can take 22 years for a saver to build a pension pot of £82,000 ($105,359), which is the average amount victims lost to scams in 2018, they can lose all of that in less than 24 hours.
“We know many people have big plans for their retirement,” Mark Steward, the FCA’s executive director of enforcement and market oversight, said. “Pension scammers destroy those dreams, often forever. Reject unsolicited approaches offering ‘help’ with your pension and get advice from an FCA authorized firm before making big changes to your pension fund.”
The data for the analysis came from two surveys. One survey, which was conducted in June, polled 2,012 adults aged 45-65 with a pension. The second survey was conducted in October and polled 2,005 adults aged 45-65 with a pension.
The ScamSmart website is available for consumers to get tips on how to spot techniques used by fraudsters, and it hosts the FCA Warning List, which names firms and individuals that the FCA said are operating without its authorization.