The five most common pension scams
It is estimated that the total amount of money that ends up being lost by pensioners to scammers is increasing year on year. In fact, it has more than doubled in just a year alone, meaning that on average £23 million is lost, which per victim, amounts to an astonishing £91,000 in total. One of the worst things about this is that in the majority of cases it is is very difficult to retrieve this money once it has been lost.
However, there are a number of ways you can make sure that you safeguard your retirement savings safe from the prying eyes of fraudsters. Furthermore, depending on your circumstances of employment, you should be aware of what your options are. For example, if you are a contractor working under a UK umbrella company, your options may well be different from a full time employee.
Guarantor Loan Comparison takes a look at the most commonly used tactics by scammers so that you can ensure that your hard earned cash is protected, and so you can see the clever and often sophisticated ways they can try to trick you into giving these pension savings over.
Promises of guaranteed high returns
It is a phrase we all know, and it is certainly one you should be applying to the notion of guaranteed high returns: if it seems too good to be true, it probably is. If a company or person is saying to you that they can guarantee a return, alarm bells should be ringing in your head. There is simply no such thing as being able to guarantee a high return, as there is always the possibility that your money will increase or decrease in an investment pot of time: there is always an element of risk involved.
In fact, investments that offer high returns usually means that you are taking on higher risks. Whilst there is no problem with being willing to accept more risk in the hope that you receive higher returns, and are aware of it, however, schemes that say that you can’t possibly lose some, or all of your money is simply a scam that you should stay far away from.
Unexpected contact via phone, email or post about your pension
As scams go, this tends to be the most commonly deployed tactic by scammers trying to get hold of someone’s pension money. This is partly due to the fact that it isn’t too difficult for a fraudster to find your contact details and then pose as being a legitimate company. Sometimes, the methods of retrieving data (buying data from business insiders for example) are illegal, but it is quite often the case that the information these people receive about you is completely free.
It was recently reported by The Pension Advisory Service that is becoming much more common for pensioners to be targeted based upon information that had put on social media. For example, many fraudsters are looking at people’s LinkedIn profile to find out data, or even savvier, contact those working at particular companies that they know is having trouble with pension scheme the firm has in place.
In terms of what you should be looking out for, you should not provide information or deal with anyone who contacts you out of the blue in order to provide you a free pensions review. This is always a scam and you could end up losing a staggering amount of money that may be very hard to get back.
Offering unregulated overseas investments
Be extremely sceptical about someone offering you an opportunity in an unusual or overseas investment that is not regulated by the Financial Conduct Authority (FCA) as its likely to be fraudulent. In terms of ‘opportunities’ that you should be avoiding, the FCA has created the Scamsmart website that shows the types of assets people have been told they should back with their pension. Some of them might surprise you!
Putting you under time pressure
This is another commonly deployed tactic by fraudsters trying to con you out of giving your hard earned retirement savings. Putting time pressure on people to give over their money before they have had the chance to be able to carefully think through whether its right for them and they have been able to look over the terms and conditions is often a successful way for people to scam pensioners.
You should never buy an investment under pressure, as the potential for damage is high. For example, by feeling forced to make a quick decision you could end up in the worst case scenario losing some, or even all of your life savings.
Things you should be wary about is if an investment sales is trying to make you hand over your savings right at this moment in order to be able to take advantage of an apparently limited time offer. They may try to do this by sending a courier to your home with paperwork for you to sign.
Claiming to be able to unlock money before the age of 55
This is often referred to as ‘pension liberation’ or ‘pension unlocking’ and this is something you should be particularly cautious about when it comes to pension scams. If you are contacted out of the blue by someone saying that are able to access your pension pot prior to 55, it is more than likely to be a scam. The problem with this is that you could end up losing not only your savings, but also be facing a tax charge, and this may be as higher as 55 per cent of the amount that has been taken out by the fraudsters, as well as further charges from your provider too.