Coronavirus: Savers warned about increase in pension scams

We explain how you can protect yourself from retirement fraudsters during the epidemic

Savers are being urged not to make any rash decisions about their pensions during the coronavirus pandemic due to an increase in scams.

The Pensions Regulator (TPR) and The Financial Conduct Authority (FCA) say fears over the impact of the pandemic on markets and personal finances may make savers more vulnerable to scams or making a decision that could damage their long-term interests.

The coronavirus outbreak has created a financial hit for all kinds of companies, including those listed on the stock market that pension funds invest in.

In turn this has caused the value of many pension pots to fall, leading to increased worry for savers and a crop of fraudsters trying to take advantage of the situation.

Former pensions minister Steve Webb, now a partner at consultants LCP, says he has been flooded with emails from people worried about the slump in the market.

He says: “It is vital that consumers are protected from con merchants who sound convincing but are actually out to prey on the vulnerable.

“It is shocking that at a time when we need to pull together there are people who see this as an opportunity to cash in on people's anxieties. Savers need to check with impartial sources of advice and guidance before making big decisions about their finances, especially in the current climate, and not be pressurised into doing something they will later regret.”

The regulators are urging people to visit the Pensions Advisory Service website for guidance before making any decisions about their retirement savings.

The FCA’s ScamSmart website also has further information about how to protect yourself from pension fraudsters.

How to spot a scam

Pension scams are becoming increasingly difficult to spot and fraudsters are using a number of tactics to dupe victims out of their cash.

Fraudsters contact people through cold calls, emails offering a free pension review or social media channels.

They will often make too-good-to-be-true proposals, offering high returns on pension savings for little risk to trick savers.

Another common tactic used by fraudsters is to pressure prospective investors into making a quick decision on a time-limited investment that never materialises.

Last year, the FCA banned any cold calling related to pensions.

This means in effect any phone call that you receive from a person or company that you do not know, where they ask about your pension, is not a legitimate call.

How to protect yourself

Try not to engage in conversation with cold-callers. Always make sure you treat unexpected calls, emails and text messages with caution as they could be from scammers. Even if a person has information about you, do not treat them as genuine.

Never give out personal information, including your bank details. Think about installing call blocker technology on your phone.

Do not be pressured into making a quick decision. Fraudsters might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period. Legitimate financial firms will always give you time before you decide.

The FCA has a record for clone firms and also publishes alerts when it identifies one.

Before investing, check the FCA Register to see if the firm or individual you are dealing with is authorised and check the FCA Warning List of firms to avoid.