Men are plagued by pension scammers more often than women, and Londoners have the highest incidence in the country, new research finds.
In all, 13 percent of adults have been approached by fraudsters trying to steal their pension pots, but this rises to 35 percent among those living in the British capital.
According to Scottish Widows research, 28 per cent of retirees are concerned about falling victim to pension scams.
Pension fraud: men are more likely to be harassed by scammers than women
In 2019, a ban was introduced on unscrupulous sharks making cold calls to rob people of their savings.
This targeted scammers and unregulated companies trying to trick people into transferring money to inappropriate high-risk investments that involve high costs.
Campaigners expected scammers to simply switch to new ruses – such as calling from abroad to get around UK law – but argued that more people would be wary if the public was made aware of the ban.
Scottish Widows found that men were more likely to be targeted by fraudsters, with 18 percent receiving suspicious approaches compared to 7 percent of women.
Of the contacts, one in 20 said the scam was successful and most victims took action, including contacting their pension provider, the police or Action Fraud – but 4 percent said they did nothing.
“Our survey found that more than half of respondents would contact their pension provider if they were the victim of a pension scam, but it is vital that people contact the Action fraud team, the UK’s national hotline for fraud and cybercrime, as the first point of contact,” said Robert Cochran, senior occupational pensions specialist at Scottish Widows.
Unfortunately we have seen an increase in the number of pension scams taking place in the UK, mainly as scammers use situations like the pandemic or rising cost of living to take advantage of people
“Unfortunately, we have seen an increase in pension scams in the UK, especially as scammers use situations such as the pandemic or rising cost of living to take advantage of people,” he says.
“This poses a threat to people’s retirement savings, as an entire pension fund could be taken.
“Often a retirement scam starts with an unexpected phone call, email or text from someone claiming to represent a financial services company or government agency, but the tactics used are becoming more sophisticated.”
Scottish Widows surveyed 5,000 adults in the late summer of this year, weighted to be representative of the population.
Scottish Widows says people should be on the lookout for the following signs.
1. You will be contacted directly – If you receive unsolicited unsolicited calls, texts or emails from a person or company about your retirement, they are unlikely to be legitimate.
Fortunately, half of Brits said an unsolicited approach would be a red flag on pension scams.
When discussing your retirement, be sure to talk to your pension provider, a regulated financial advisor, or a government agency using the contact information on their website before making a decision.
2. You get an offer that seems too good to be true – Schemes that offer exceptionally high returns tend to be very risky and fully guaranteed returns are rare.
You should also be wary and suspicious of language such as “retirement release,” “loophole,” “free retirement review,” “temporary offer,” or “one-time investment,” as these could be the lead-up to a potential scam.
3. You will be offered access to your pension before your 55th birthday – You can only claim your pension before your 55th birthday in very specific circumstances.
Participating in a scheme that gives access to your pension before that time leads to heavy tax fines and possible loss of your money.
4. You are expected to invest in an unusual asset – Pensions are usually linked to funds that invest in equities, fixed income and cash.
The assets you ultimately invest in should be known and easy to find.
While it is possible to invest in more specialized assets, such as commercial real estate, through a ‘self-invested’ pension, it is not a requirement to grow your pension pot.
5. You will be asked to withdraw money first – The money that is deposited for your pension has already been invested in various funds or investments that your pension provider makes available.
This ensures that your return is tax-free and well protected. You never have to withdraw money from your pension to invest it; they are invested by the pension plan in the funds you select.
6. You are asked to act quickly for the best deal – Decisions about your pension fund should not be made hastily and offers of immediate investment for a one-time offer can be risky.
Take your time and let yourself be well advised and guided to manage your pension properly.
7. You get suspicious contact details – Other factors that make people think they are being targeted by pension scammers are if a company wouldn’t allow you to call them back, and when contact information is just a cell phone number or PO box.
8. You are told about tax breaks – Someone or a company claims to know tax loopholes or promises additional tax savings.
A Free Retirement Scam Prediction Tool is offered online by a branch of financial wellness specialist People-tech.
The company says there are 20 clear questions regarding the tactics a pension scammer could use to force people to transfer their pensions, and that you don’t have to give out your personal information to participate.
At the end, you’ll be given a list of potential red flags based on the answers you’ve provided and a percentage score on the likelihood that your retirement transfer is a scam.
The People-tech website, called Help & Advice, says the tool should only be used as a guideline and that it is people’s own responsibility to assess the viability of any pension transfer they wish to make.
The analysis of data from more than 1,400 reviews completed over the summer raised red flags in nearly a quarter of cases.
And it found that a cold call is the most popular cold calling method, despite the cold calling ban for pensions.
Of those who received a call, 9 percent were pressured to make a quick decision, and 16 percent were told the advisor could achieve above-average investment returns.
If concerns are identified, people are instructed to, among other things, stop the transfer, contact their pension plan, stop a payment, report the matter to Action Fraud on 0300 123 2040 or at actionfraud.police.ukand report it to the Financial Conduct Authority on 0800 111 6768 or use the scam reporting form at: fca.org.uk.
Saq Hussain founded People-tech in 2021 after a financial career that has included jobs at PwC’s pension arm, Towers Willis Watson and KPMG.
He says the pension assessment tool was developed to help people who are considering making a transfer do a “sense check” and find out if it could be a scam.
Hussain says of the latest scam trends: “Our analysis shows a clear and significant increase from the start of the year, perhaps an indication of how the cost of living crisis could be an entry point for scammers.
‘Even though cold calling is prohibited, people are still approached in this way.’
Analysis of pension transfer ratings (Source: People-tech)
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