/ Money

Watch out for the pension sharks

pension shark

Below seemingly calm waters, there are steely-eyed predators seeking to snatch away your retirement money. Could you spot a pension scam?

Pension scammers have been encouraged to widen their net by the so-called ‘pension freedoms’ which came into effect in April 2015. The sad reality is that pension reforms – which have largely been positive for retirees – have also been a boon for criminals looking to relieve you of your money.

Under the new rules about how you can access your pension in retirement, it’s easier to take money out from the age of 55, so scammers are attempting to persuade people to invest their retirement savings in schemes that are either dubious or completely bogus. Taking an ad hoc sum from your pension now means it’s fairly simple for the money to find its way into a fraudster’s account.

So we’ve outlined some of the tactics used by scammers and key tips to keep your cash safe.

Pension scams

Fraudsters are changing their tactics to exploit the new pensions world. Pension investment scams are on the increase and the average loss to victims of pension fraud is around £40,000.

We found that many Which? members had received suspicious calls asking about their pension arrangements. Callers will often offer a free review of your pension, implying that they are connected to the Government and providing advice on the recent pension changes.

We also uncovered scammers posing as legitimate financial advice companies. The reality is that fraudulent activity aimed at extracting money from pensions is often initiated via unsolicited telephone calls or texts.

Tips for avoiding scams

Pensions scams are a huge problem, potentially impacting millions of savers and causing significant financial losses for those who fall victim.

Avoid falling victim to a pension scam by brushing up on these tips to help you spot one:

  • Ignore unsolicited calls and texts about your pension
  • Avoid firms using phrases such as ‘pension liberation’ and ‘cash in your pension’
  • Avoid any companies suggesting you can get access to your pension before you reach the age of 55
  • Never rush into agreeing a pension transfer and your current provider should check the HMRC registration of the new scheme
  • If you’re unsure, speak to a financial adviser

Perhaps you’ve had a ‘near miss’ with a pension scam? What happened and what did you do?

Come and see us on Friday 8 July in Glasgow’s Buchanan Galleries where we’ll be providing free advice on how to safeguard yourself from scams.


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It is a world with a good sprinkling of wicked people – fraudsters, criminals and those who are “legal” but exploit those who are not too savvy. Equity release for your home; great to get your hands on some cash but who really wins financially? Webuyany…car/house, but at prices that disadvantage you. Cash for houses at below market value. PPI misselling where a big chunk of your legitimate claim goes to someone else. Extortionate payday loans.

As well as cracking down on the fraudsters we need to help educate people in the ways of the world. Scams will always be there in one form or another, one step ahead of the authorities; the law won’t stop them. But we can make people more aware of what goes on, and try to make people think harder and seek advice before doing something they might regret. Seeking professional advice – from people who understand such matters better than us – makes sense, just like going to the doctors. To moan that it costs money…..well, it could save you an awful lot more.

Chicanery becomes more possible with increased complexity and that is what we seem to be getting.

Consider. On base tariff for gas or elctric, one fixed standing charge country wide. Confused population or population untroubled by energy best buy anxiety.

Ditto mandatory prices for calls for mobile phones. Packaging and coverage become the differentiation.

For taking pensions out early then if you are not using a regulated financial adviser then you have an office funded by a set deduction which asks the relevant awkward questions before agreeing the release.

We have enough surveys from Which? and others to know that there is a surprisng level of illiteracy and innumeracy in the UK and that preaching does not work. Simplify processes to make them less complex and troubling, and make the processes less scam enabled.

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I can see what you are saying Diesel but I do not agree with your remedies. Fraud and deception are offences and should be prevented but not by taking away everyone’s choices and making things so universally simple they can end up being inequitable. More effort to apprehend the perpetrators of scams and dodgy dealings is what’s needed.

While it is true that the multitude of elements to different tariffs provide a perfect pathway for confusion and poor choices , standardising charges and terms and conditions is not necessarily the answer as it reduces competition and choice. So far as the pension scams are concerned, the same logic you have put forward in relation to utility charges would withdraw the right of people to straightforwardly access their pension pot in case they got confused and made an unwise choice. It is arguable that the process has already been made too simple so you are suggesting an official intermediary function to check whether people know what they are doing.

Miss-selling is still wrong and must be stopped, but there comes a point when you cannot protect people from temptation and it is impossible to legislate for every potential form of chicanery. It is too wide a generalisation to say that illiteracy and innumeracy might be the reason why people get duped. It happens to perfectly capable and intelligent people as well because they throw caution to the winds or are greedy. If people are lied to, or not given proper cooling-off periods, or not given fair warning, that is one thing and can be dealt with through the law; society must find other ways to protect the vulnerable and those at risk of exploitation, and education and community support are possible ways to achieve that. However, it is difficult to close all loopholes when the rewards for criminal activity are apparently so good and the action against it so weak.

duncan, agreed. Instead of dumbing everything down we should be educating people to understand the basic things they need to deal with life – not just in the UK but wherever else they might visit or settle. When I see that “surveys show” we aren’t capable of doing basic maths for example i think the rest of the world – China, India, Korea, the EU – must think we are a joke, and no wonder our economy might be dodgy. However, I don’t believe these surveys. We should help those who cannot, for genuine reasons, make appropriate decisions but not penalise those (a majority I think) who can.

We could help many people by doing what Dieseltaylor has suggested. Everyone will benefit by removing unnecessary complexity.

Fixed charges reflect (or should) fixed costs and these will differ from company to company. So why remove the competitive element that should keep fixed costs down? We abolished retail price maintenance for very good reasons; I don’t want to see pressure taken off organisations by allowing a universal cost to be set. We should pay only what it costs.

Using Which?Switch on line or by phone is an easy way to find out your cheapest energy deals. All you have to do is know your annual spend or usage and your post code; all the work is then done for you. You don’t need to understand standing charges, tariffs, off peak, hourly charging (when smart meters allow), if you dont want to. It’s all done for you.

Mary says:
9 July 2016

I am 64 years and still cannot retire as my state pension will not cover my bills. I have a private pension what really scares me is you cannot get advice from any place as I do not understand anything about investing all you hear is look for an independent adviser? So overwhelming I would like to retire as I have been diagnosed with a serious chronic condition.

Try website Unbiased for a local Independent Financial Adviser and tell them about your health problems, as you may be able get a better annuity.

I am afraid, Mary, that we have to accept that free advice is worth what you pay for it. That does not mean that the advice provided for a fee by an independent financial adviser will always be better but at least they are accountable. What advice you need will depend heavily on the level of your existing savings as you go into retirement and then the balance [if any] between your expenditure and your income. If those two are significant then seeking professional advice might be worth while, otherwise spending some time looking at the information leaflets in one or two mutual building societies might be all the help you need. The weekend newspapers have useful financial advice supplements that can often provide guidance for people in your situation.

This basically boils down to why has this country still not banned the phone as a means of selling to people. If you or I ring a company then fine, otherwise illegal.