Six common pension scam tactics revealed as TV warning launches

Regulators have launched a TV advertising campaign to raise awareness of pension scams and the most common tactics used by fraudsters. Moira O'Neill shares expert advice.

Regulators have launched a TV advertising campaign to raise awareness of pension scams and the most common tactics used by fraudsters. 

Victims of pension scammers lost an average of £91,000 each in 2017 with the offer of a 'free pension review' ranking top of the methods used to persuade them to part with their pension.

A poll commissioned by the Financial Conduct Authority and The Pensions Regulator reveals that almost a third (32%) of pension holders aged 45 to 65 would not know how to check whether they are speaking with a legitimate pensions adviser or provider.

Cold calling is currently by far the most common method used to initiate pension fraud. Nicola Parish, Executive Director at The Pensions Regulator says: 

 "If someone cold calls you about your pension, it’s probably an attempt to steal your savings. Our message is clear – hang up and report it."

Other scam tactics include:  

•    Unexpected contact about your pension via phone, post or email

•    Promises of guaranteed high returns and downplaying the risks 

•    Offering unusual or overseas investments that aren’t regulated by the FCA e.g. overseas hotels, forestry, green energy schemes

•    Putting people under pressure to make a quick decision, for example with time limited offers, and sending a courier round with paperwork to sign 

•    Claiming to be able to unlock money from an individual's pension (which is normally only possible from age 55).

How to stay safe

Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority, says: "The size of individual pension pots makes pensions savings an attractive target for fraudsters. That's why we're urging anyone who is thinking about transferring their pension to check who they are dealing with and only use firms authorised by the FCA. 

"Pension scams can cause victims significant harm – both financially and mentally. If you are ever in doubt about a pension offer, visit the ScamSmart website."

Guy Opperman, Minister for Pensions and Financial Inclusion, says:

"I would urge savers to always exercise caution and seek independent guidance or advice before making important financial decisions.

“Anyone looking for free, impartial guidance on pensions can visit Pension Wise or The Pensions Advisory Service."

Dimitrios Tsivrikos, consumer and business psychologist, says:

 “Scammers are intelligent, ambitious and deceiving. They mimic the sales patter used by salesmen, building trust, a rapport and a relationship to infiltrate our psyches and influence our behaviour. 

"That's why I want everyone to remember that if it sounds too good to be true, then it probably is. So, put the phone down to unsolicited calls regarding your pension and stop a scammer from stealing your retirement."

The regulators recommend four simple steps to protect yourself from pension scams:

1.    Reject unexpected pension offers whether made online, on social media or over the phone. 

2.    Check who you're dealing with before changing your pension arrangements. Check the FCA Register or call the FCA contact centre on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA.

3.     Don't be rushed or pressured into making any decision about your pension

4.    Consider getting impartial information and advice.

If you think you've been a victim of a pension scam, report it. Visit www.fca.org.uk/scamsmart to find out more.