News that criminals are deceiving a rising number of people into handing over their hard-earned retirement savings is extremely worrying.
The fact that the average loss in these frauds is £91,000 makes it all the more shocking - many will have lost far more than that.
These are details released by regulators at the Financial Conduct Authority and The Pension Regulator who launched ScamSmart, a campaign to combat criminals targeting pension savers1.
In particular, they are concerned about fraudsters offering free “pension reviews” to individuals which turn out to be schemes for funnelling their pension savings into either highly inappropriate investments that soon fail, or simply for stealing the money outright.
These criminals have taken advantage of peoples’ confusion around the new regime for pensions, which changed in 2015 to make it simpler for people to access their pension money flexibly when it comes to time to retire. In order to take advantage of these “Pension Freedoms” individuals may have legitimately been required to transfer their pension money to new companies, and perhaps to make decisions about how their money is invested for the first time.
In amongst all that activity, fraudsters have risen up to exploit misunderstanding of the rules and confusion about investing. A typical ruse - as described by the regulators - goes like this:
- A company makes contact unexpectedly about your pension via phone, post or email, perhaps offering a free ‘pensions review’;
- They promise guaranteed high returns and downplay the risks;
- The investment opportunities they describe are unusual or overseas and aren’t regulated by the FCA - overseas hotels, forestry, green energy schemes;
- They put you under pressure to make a quick decision, for example with time-limited offers, and send a courier round with paperwork to sign;
- They claim to be able to unlock money from your pension - something which is normally only possible from age 55.
This is just one possible scenario. Fraudsters are experts at adapting to changes in public awareness, always looking for a new angle to exploit. The regulators are acting with a public awareness campaign getting underway and a ban on cold-calls in the works.
Individuals can help to protect themselves. A vital step to take before retirement savings are accessed is to seek out the official help that is available. The Government’s Pension Wise service offers free, impartial guidance to help you understand your options at retirement. You can access the guidance online at www.pensionwise.gov.uk/ or over the telephone on 0800 138 3944.
Beyond that, following these rules will make the lives of scammers much harder:
- Treat all unsolicited contact by companies with caution, even if you’ve been a customer for years and the call, text or email confirms basic information about you.
- If you are unsure about a company that has contacted you, break off and attempt to re-contact the company by other channels. Use contact details you find for yourself, rather than relying on the details you’ve been given.
- You can check for authenticity of financial companies on the Financial Conduct Authority’s online register or call the FCA contact centre on 0800 111 6768 where there will also be certified contact details for genuine companies.
- If asked, never give up security details such as telephone banking passcodes, PINs or login details.
- Don’t be rushed into action. A common tactic is to push victims into handing over details or transferring money with the threat that failing to act will be mean a bigger fraud will take place, or perhaps that a great investment opportunity will be missed. If in doubt, stop and take measures to verify the circumstances.
- If it sounds too good to be true, it is. Investments offered without a proper presentation of the risks attached are, at the least, breaking regulations and may be entirely fraudulent.
Reputable pension companies should make it easy for you to establish that they are genuine and will operate strong anti-fraud policies. For example Fidelity will never ask for your full PIN or online password.
As a firm authorised and regulated by the Financial Conduct Authority, Fidelity always hold a significant amount of liquid capital and is required to separate client money and assets from our own resources.
The value of investments and the income from them can go down as well as up, so you may not get back what you invest. Withdrawals from a pension product will not be possible until you reach age 55. This information does not constitute investment advice and should not be used as the basis for any investment decision nor should it be treated as a recommendation for any investment. If you are unsure about the suitability of an investment, you should speak to an authorised financial adviser.
1As published on 14 August 2018. (https://www.fca.org.uk/news/press-releases/regulators-warn-public-pension-scammer-tactics-victims-report-losing-average-91000-2017)