Pension scams: how to spot dodgy investments and stay safe

Pensions scams can devastate your retirement plans – and there are more conmen out there than ever before. Here's how to spot a fake investment opportunity and protect your pension savings.

A pension scam victim typically loses £91,000, with some losing more than £1 million.

That's according to new data from Action Fraud, which is warning people to stay vigilant when it comes to making decisions about their retirement pot.

Pauline Smith, director of Action Fraud, said: "These statistics prove that the consequences of falling victim to a pension scam can be devastating.

"Victims can lose their life savings and are left facing retirement with little or no income."

Pension freedoms attract pension scammers

While pension freedoms have been a revelation in terms of how we manage our finances in retirement, sadly they've also triggered a boom in pension fraudsters as a result of the huge sums of money involved.

As such, it's vital you learn to spot the telltale signs that you're communicating with a conman before your retirement savings pot is wiped out

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1. Hang up on cold callers

Many pension scams start with an out-of-the-blue phone call (or mail or text), often offering you a free pension review.

Do not respond to these approaches: the Government has recently banned all forms of pension cold calls unless you have expressly asked a firm to contact you.

While the ban isn't going to stop unscrupulous firms or outright criminals from contacting you, it does mean you can feel confident that the person on the other end of the line isn't worth talking to and simply hang up (or delete the mail/text).

If you want advice about your pension or a review, you should contact Pension Wise, Citizen’s Advice, or make an appointment with an Independent Financial Advisor – just be careful what you pay for.

2. Check everything

A lot of people have fallen victim to a scam because it was ‘recommended by a friend’.

Don’t rely on a friend’s tips do your own homework to make sure it is above board.

Check your free credit report for suspicious activity

3. Check up on your financial adviser

Criminals will pose as financial advisers in order to part you from your savings.

Before you discuss your finances with an adviser make sure they are registered with the Financial Conduct Authority (FCA).

4. Keep an eye out for scam buzzwords

Scammers tend to use a number of known 'red light' words.

Be wary of anyone who mentions "time-limited offers", "one-off investments", "cashback", "pension liberation" or "loopholes".

Pension scams: how to stay safe (image: Shutterstock)

5. Check if it’s a known scam

Visit the FCA’s Scamsmart website to check if the deal you are being offered is on its list of known scams.

The Pensions Advisory Service (TPAS) also has an online pension scam guidance tool that can help you work out whether an investment is legitimate.  

6. Be wary of overseas investment deals

A well-known scam is to convince you to move your pension into an unregulated overseas investment such as a hotel, vineyard or overseas building project.

This puts all your money in one place and therefore most at risk. Never agree to invest your money overseas in unregulated projects.

7. Don’t fall for ‘guaranteed’ returns or fancy websites

There is no such thing as a guaranteed return when it comes to investments.

Don’t assume something is credible just because it looks flashy with impressive brochures or websites – these days anyone can pull together a smart website or paperwork.

Make sure you question everything – no matter how credible it may seem.

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8. Don’t be rushed

Scammers will try to pressure you into making a mistake by telling you the offer is time-limited or by sending a courier to your door to wait while you sign documents.

Don’t be pressured, take your time to check everything even if it means you have to turn down the deal.

Pension scams: how to stay safe (image: Shutterstock)

9. Talk to Pension Wise

If you are over 50 and have a defined contribution pension you can talk to the government’s Pension Wise scheme for advice on your retirement options.

10. Call The Pensions Advisory Service

You can call the Pensions Advisory Service for help with your retirement savings. The number is 0300 123 1047.

11. Report potential scams

If you think you may have been the victim of a scam, or have been contacted by scammers, report it to your pension provider and the police via Action Fraud.

Contact your pension provider immediately as they may be able to stop a transfer if it hasn’t taken place yet.

You can call Action Fraud on 0300 123 2040.

Check your free credit report for suspicious activity

More pension articles on loveMONEY:

Work out how much money you need to retire

Pension freedoms: all you need to know

How safe are company pension schemes?

 

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