The Financial Conduct Authority is warning of a new wave of pension scams. We speak to Tracey McDermott, Director of Enforcement and Financial Crime at the FCA for for details on this scam…
‘Here at the Financial Conduct Authority (FCA) we have evidence that people are being contacted unexpectedly via phone, email or text messaging, and offered a ‘free pension review’.
‘Many callers falsely claim they are acting on behalf of the FCA or the government. They will try to persuade you to move your pension funds to a self-invested personal pension (Sipp) or a small self-administered scheme (SSAS) in order to get better returns.
‘In reality, your pension pot is typically invested in high-risk unregulated investments, which provide unreliable returns and can be hard to sell. By complying with these cold callers, you could lose everything you’ve invested – significantly reducing your retirement income.’
Which?’s review on the scam
We believe your pension is far too important to leave in the hands of a cold caller who may not have your best interests in mind.
We would always strongly recommend seeking independent, impartial advice to help you decide what to do with your retirement funds – and it was recently confirmed in the Queen’s Speech that, from April 2015, everyone who retires with a defined-contribution pension will be offered free impartial guidance. So, unless you’re due to retire in the next year or so, it may be best to sit tight until then.
Sadly, it’s typical for new dodgy companies to appear whenever a significant change, such as the recent pension reforms, comes to an area of financial services. The pensions shake-up gives people more control over their retirement funds, but has also left many confused.