Pensions - Articles - Staying safe from pension scammers

 Dean Butler, Managing Director for Retail Direct at Standard Life comments: “With high inflation still driving up the cost of living in the UK, and interest rates rising, many people will be feeling more financially vulnerable than before. Sadly, tough periods are boom times for scammers, as it’s easier to exploit people who are struggling. Pension savings are often targeted by criminals as they can be high value and rules around pensions are complex – confusion is a key tool in a scammer’s arsenal.

 “Put simply, a pension scammer will try to trick you into handing over your pension savings. This could involve you transferring your pension pot into a non-existent or high-risk scheme, or being persuaded to release some or all of your pension pot. Scammers often try to tempt their victims with offers of better returns, one-off opportunities, or access to their pension savings before the minimum pension age of 55. Unfortunately, if you fall victim to a pension scam, it’s likely you’ll find it very difficult to get your money back. It’s therefore incredibly important to understand how pension scams work, how to spot the warning signs, and what to do if you’re not sure something is genuine. This could help you protect your savings and avoid becoming a victim in the future.”

 Dean Butler outlines the things you should be aware of to protect you from pension scams:

 How do pension scams work? “Pension scams can target victims at any age or stage of life, whether you’re paying into a pension plan or taking money from one. Pension scammers often prey on people’s anxiety, and may promise higher returns to savers or offer pensioners the prospect of extra money. They can be very convincing, developing techniques to draw people in. Known scams include promising ‘higher’ or ‘guaranteed’ returns (perhaps through investments like overseas property, renewable energy bonds, forestry, parking, storage units, art or even cryptocurrency), and telling you that you can access your pension savings early through a loan or loophole.

 What warning signs should I look out for? “A pension scam often starts with an out-of-the-blue email, letter, direct message on social media, or phone call. The scammer may describe themselves as a pension adviser or pretend to represent a government agency, legitimate financial services firm, or well-known personal finance expert. Some of the key signs to be wary of include:

 Phrases like ‘free pension review’, ‘pension liberation’, ‘loan’, ‘savings advance’ or ‘cashback’
 Offers of guaranteed or high returns from unusual, unregulated or overseas investments, offering no consumer protection – It’s worth noting the investments usually require you to transfer your pension savings into a new scheme, and a scammer claiming to be an adviser may take multiple fees along the way. Investments that are only available after a transfer could be a sign of a possible scam

 Help to release upfront money from your pension plan before the age of 55
 Pressurised sales tactics that refer to opportunities being ‘time limited’ or ‘one-off’

 Complicated investment structures – For example, you could be ‘advised’ by a scammer to invest in a bond held by a pension scheme. Due to the investment structure, you may pay charges for the pension scheme and the bond. The bond may be provided by a company connected to the scammer.

 How can I avoid pension scams? “If you’re unsure whether or not you’re being scammed, it’s better to play it safe and not take action around your pension savings until you are certain.