More than half of UK adults (56%) have or know someone who has received a suspicious communication in the last 12 months according to research from Canada Life. This equates to 29.6m people across the UK.
The majority of these cases can be described as “phishing scams” (57%), when a fraudster attempts to imitate a legitimate company or person to secure important information from the victim. Crypto scams are also becoming worryingly common, with around 1 in 6 reporting they or someone they know has received one in the last 12 months.
Scammers are mainly relying on email (65%), although over two fifths (46%) were via a text message and about two fifths (38%) via a cold call.
When asked specifically about pension scams a fifth of UK adults (22%) said they had been approached by phone, text or email offering free pension advice (or a free pensions review, investment opportunities or a tax refund) in the last 3 months, up from 19% when this was previously asked in October 2020.
Victims are getting younger – and losing more
About a fifth (21%) fell victim to the scam (either themselves or someone they know did). This rises to just under two fifths (39%) amongst those aged 18-34 years old. The average amount of money lost to the scams was almost £300 (£294) – rising to almost £450 (£448.50) amongst younger people.
Amongst those that fell victim, or knew someone who had, many cite a negative impact on mental health and attitudes towards others because of it:
Falling victim to scams can take a toll on your mental wellbeing 83%
Feel foolish for falling for it 63%
Their trust in people has completely gone 49%.
Additionally, many victims express little hope in getting money back from a scam (59%).
Over two fifths (43%) of UK adults have become increasingly worried about scams, whilst a third (34%) say they don’t know what services they can use to help protect themselves against this. A similar proportion (32%) don’t know how to prevent fraudsters / scams from targeting them, and about three in ten (29%) wouldn’t know who to contact if they were scammed.
Andrew Tully, technical director at Canada Life: “Aspiring fraudsters will stop at nothing to separate innocent people from their hard-earned cash, sometimes using incredibly manipulative and sophisticated techniques which can easily catch you at an unguarded moment.
“Falling prey to a scam can be utterly devastating, not only for the individual involved but also for their family and friends. Futures and livelihoods can be snatched away in the blink of an eye so it’s essential we work harder as an industry to highlight where help and support can be found. Improved education on how to spot a scam and where to report them will also be essential if we are stand any hope in surmounting this scamming Everest.
“With families trying to make ends meet as the cost of living grows, an offer of money or easy access to your pension early might seem the perfect opportunity to dig yourself out of trouble - at face value. Sadly it’s highly likely it will be scammers, so be aware and follow the simple rule of thumb - if it appears too good to be true, it inevitably is. Simply walk away, hang up, or delete the email or text.”
Tips to help avoid financial scams
1. If you receive an offer to help you access your pension savings before age 55. It is only possible to do this in rare situations, for example if you are very ill, so always check with your pension provider before making any decisions.
2. Warnings that the deal is limited and you must act now. This is a pressure tactic, and making any financial decisions should not be done under pressure.
3. HMRC will never contact you by email, phone or text informing you of a tax refund, so simply delete or ignore any contact made this way – HMRC will only contact you via post.
4. You are discouraged from seeking professional financial advice or talking to Pension Wise or The Money and Pensions Service..
5. Sign up for Action Fraud Alert, a free service provided by the National Fraud Intelligence Bureau. The service alerts about new types of crime or those which are increasing in their severity. If you sign up you will receive those alerts which are relevant to you. https://www.actionfraud.police.uk/sign-up-for-action-fraud-alert
6. Contact by somebody who is not on the Financial Conduct Authority (FCA) Register. The Register is a public record of all the regulated firms and individuals in the financial services industry, including retirement income providers and investment companies https://register.fca.org.uk/
7. A recommendation to take a large amount of money, or your whole pension pot, in a lump sum and invest it elsewhere, for example in overseas property, forestry, car parking or storage units.
And be very wary of unsolicited offers of ‘amazing investment returns’
8. Seek professional financial advice. A regulated financial adviser would be able to explain the rules and tax implications of different options and help you make the best choices for your personal circumstances, so be very suspicious if this is discouraged.
9. There can be significant tax implications if you choose to cash in your pension in one go, so check the tax position before you make any decisions. Tax calculators are available online including: https://www.canadalife.co.uk/tools/pension-tax-calculator
10. Check www.fca.org.uk/scamsmart for known scams and use the tools to help identify a potential scam
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