Better-educated people are more likely to be a victim of fraud as they think they are too intelligent to be scammed
Victims of pension scams could see their savings cleared out by fraudsters in less than a day, leaving them penniless in retirement, an industry watchdog has warned.
Analysis by the Pensions Regulator (TPR) as part of the regulators’ joint ScamSmart campaign with the Financial Conduct Authority (FCA), reveals that it could take 22 years for a saver to build a pension pot of £82,000 – the average amount victims lost to scams in 2018.
However, the regulator says savers could lose all of their savings within the space 24 hours if they fall victim to scammers.
Nicola Parish, executive director of Frontline Regulation, TPR, says: “Pension scammers ruin lives, stealing away decades’ of savings with professional-looking websites, ‘expert’ advice and an easy manner making it tough to spot the fraud. But once you sign on the dotted line, often there’s no second chance.
“Scams can happen to anyone, so before making any decision about your pension, take your time, be ScamSmart and always check who you are dealing with.”
Overconfidence
Being overconfident could also lead to savers missing the signs of a scam, with better-educated people thinking they were too intelligent to get caught out.
In the survey of over 4,000 people, despite six out of 10 saying they are confident to make a decision about their pension, the same number would trust someone offering pensions advice out of the blue – one of the main warning signs of a scam.
Those with university degrees are also more likely to fall for a pension scam.
The survey found that with a university degree are 40% more likely to accept a free pension review from a company they’ve not dealt with before and were 21% more likely to take up the offer of early access to their pension pot. Both common scam tactics.
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 in a bid 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.
Earlier this 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.
Firms that break the rules will face fines of up to £500,000.
Kate Smith, head of pensions at Aegon, says fraudsters are increasingly sophisticated and will often re-invent their approach.
She says: “While it may appear that they to want to help you, their only motivation is helping themselves to your pension savings. And being caught out and losing your pension is devastating.
“There’s often warning signs that should set the alarm bells ringing, but if you rush into things or are too self-assured you may miss them.
“For example, if you’re contacted out of the blue and offered a free pension review, the chances are it’s a scam.
"The offer of a free pension review can sound harmless but it’s a method commonly used by scammers to trick people into giving personal and financial information. The mention of those three little words, should immediately set off an internal warning.”
How to protect yourself
Try not to engage in conversation with cold-callers. Just put the phone down as it is illegal.
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, don’t treat them as genuine.
Never give out personal information, including your bank details. Think about installing call blocker technology on your phone.
Don’t 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.
FCA registered firms are unlikely to contact you out of the blue. If you are unsure about a firm you should check the FCA Register to see if the company or individual you are dealing with is authorised.
If you have been scammed or contacted by an unauthorised firm you can contact the FCA’s consumer helpline or you can call 0800 111 6768.
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