Research reveals 13% of adults fall victim to fraud.
Football fans approaching retirement could be particularly vulnerable to falling foul to scammers, according to new research by the Financial Conduct Authority and The Pensions Regulator as they launch the ScamSmart Pension Scams campaign.
The need to raise awareness and show fraudsters the red card is evidenced more broadly in interactive investor’s upcoming Great British Retirement Survey 2020, which attracted responses from over 12,000 UK adults at different stages of their retirement journey.
A sneak peek at the survey’s yet to be released, broad findings revealed that 13% of respondents admitted to having been scammed, rising to 18% in the 72-77 age category, and 20% amongst those aged over 77.
Investment fraud (32%) followed by current account fraud (22%) were the two most common cited types. Some 43% said they got their money back, and of those scammed, 11% said it had put them off attempting to put their financial affairs in order, for fear of being scammed again. Romance and holiday/ property scams were also frequently cited in the verbatims.
Myron Jobson, Personal Finance Campaigner, interactive investor, says: “While the Premier League summer transfer window deadline is rapidly approaching, savers should be in no rush to make any decisions affecting their pension – so as not to be caught offside by individuals who don’t play by the rules.
Pension scams are simply ghastly and in the worst-case scenario, could result in the loss of a retirement nest egg in an instant. The coronavirus pandemic has created a perfect storm for crooks to shroud their nefarious schemes among the uptick in correspondence by legitimate organisations relating to coronavirus measures. Even the most seasoned investor can fall victim to scams, so it is more important than ever to take care with your money and look out for the warning signs.”
Myron’s five top tips to show fraudsters the red card
Look out for the tell-tale scam signs
Cold calling relating to pensions has been banned since 2019, but that still doesn’t stop unscrupulous individuals from using this method to scam people out of their cash. No reputable pensions firm would call you out of the blue to suggest you transfer your retirement nest egg to a better deal. When in doubt, simply hang up.
Also beware of things that signal illegitimacy. If the firm doesn’t allow you to call back, it is most likely because it is a fraudulent enterprise. Also beware of firms that only list mobile phone numbers or a PO box address on their website.
Fraudsters may try to tempt you in by offering free pension reviews. Don’t fall for it. It could be a trick to get you to share personal information.
If it sounds too good to be true, it usually is
There is no such thing as a free lunch when it comes to your finances. If you come across a proposition that promises ridiculous returns and downplays risk, it probably is too good to be true.
Before you commit to any offers, make sure you do extensive independent research on the company and make sure you check all the information yourself – don’t just take their word for it. There are no shortcuts when it comes to financial management, but help is available. The government’s free and impartial pension wise service is a good first port of call, offering guidance on options for those with a defined contribution pension.
Do your due diligence
Be suspicious of any unsolicited correspondence on pension transfers. Why take the risk? Have a look at the FCA’s ScamSmart website to see if the offer is a known scam. You should only deal with financial services firms that have been authorised by the city watchdog.
If you deal with an unauthorised firm, you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme safety net if things go wrong.
Don’t be pressured into scoring a spectacular own goal by transferring over your hard earn cash without doing your own research and shopping around. It is important to heed the words from the FCA and The Pensions Regulator – unlike football, there is no deadline when it comes to pensions.
Workplace pensions need careful consideration as they may have additional benefits, such as life insurance, which could be costly to replace. If your employer is still making contributions to a workplace pension, they are not required to pay into a new plan instead.
If you’re thinking of transferring any ‘safeguarded benefits’, such as pensions with a guaranteed annuity rate or a defined benefit pension worth more than £30,000 you must seek professional financial advice.
Beware of offers to unlock your pension before age 55
Schemes that offer to unlock your pension before age 55 should be avoided at all cost. These schemes, also known as pension liberation and pension loans, are trying to get you to break the law and are likely to result in you paying huge administration costs and big tax bills, in some cases leaving people with no savings for retirement.
Only in very rare case, such as very poor health, is early access to pension possible.
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