Millions at Risk of Falling for Pension Scams

UK Regulators warn public to be wary of tactics used to pilfer their savings.

UK regulators the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) are launching a campaign to warn the public about criminals targeting their retirement savings. The regulators said pension fraud victims lost an average of £82,000 in 2018.  

The campaign will reach out to the public through TV, radio, and online advertising, and is being bolstered by new research from the regulators that suggest that 5 million people, or 42% of pension savers in the UK, could be at risk of falling for one of several common tactics used by pension scammers. They say the likelihood of being drawn into one or more scams increased to 60% among those who said they were actively looking for ways to enhance their retirement income.

“At a time when savers have more flexibility than ever over their pensions, it is inevitable that scurrilous criminals hellbent on stealing people’s retirement pots are circling,” TPR Chief Executive Charles Counsell wrote in a commentary on the regulator’s website. “These are not petty thieves, but sophisticated fraudsters using clever tactics to appear legitimate but who have just one aim—to rip people off and run.”

According to new survey research from the FCA and TPR, cold calls, exotic investments, and early access to cash among most persuasive tactics used by fraudsters. They also found that those who consider themselves financially savvy are just as likely to be persuaded by scammers as anyone else.

The scammers are known to target pension savers by tempting them with offers of high returns in investments such as overseas property, renewable energy bonds, forestry, storage units, or biofuels. According to the research, 23% of 45- to 65-year-olds surveyed said they would likely pursue these exotic opportunities if offered. However, the regulators warn that exotic or unusual investments are high-risk and are typically unsuitable for pension savings.

The results also showed that attempts by scammers to help people access their pensions early proved to be a persuasive tactic as 17% of 45- to 54-year-old pension savers said they would be interested in an offer from a company that claimed it could help them get early access to their pension. However, the FCA and TPR warn that accessing your pension before 55 is likely to result in a large tax bill.

Even more troubling is that nearly a quarter (23%) of all those surveyed said they’d be willing to speak with a cold caller who wanted to discuss their pension plans,  despite the  fact that pension-cold calling was made illegal this year. The respondents said they would be likely to ask for website details, request further information, or find out what they’re offering, even if the call was unsolicited.

“Pensions are one of the largest and most important investments we’ll ever make, and robbing someone of their retirement is nothing short of despicable,” Guy Opperman, Minister for Pensions and Financial Inclusion, said in a statement. “We know we can beat these callous crooks, because getting the message out there does work.”

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