According to The Pensions Regulator figures show that last year those that fell victim to pension scams lost on average £82,000.
How pension scams work
It is important to remember that anyone can be the victim of a pension scam; therefore everybody should be aware of the warning signs.
Pension savers are persuaded by scammers to transfer their entire pension or release funds from it by scammers offering attractive sounding returns.
The pension money is often invested in high risk investments like:
- Overseas property and hotels
- Renewable energy bonds
- Storage units
- Or stolen outright
Scammers try to persuade potential victims to transfer money into single member occupational schemes or other occupational pension schemes.
Not only could savers lose all their money but they could also face a high tax bill from HMRC if they withdraw their pension savings before the age of 55.
Pension scam warning signs
Although cold calling people is illegal this does not deter scammers from phoning, emailing or sending texts. Some have official looking websites that lead people to believe they are government backed.
Other common pension scam signs are:
- Phrases like ‘free pension review’, ‘pension liberation’, ‘loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’
- Guarantees that higher returns can be achieved on pension savings.
- High pressure sales tactics- for example time limited offers, using couriers to send and wait whilst documents are signed.
- Unusual high risk investments, usually overseas and unregulated therefore less or no consumer protections.
- Long-term pension investments. Meaning that consumers that transfer monies in do not realise there is a problem until further down the line.