Pension scams: new way to check if investments are dodgy

New tool launched to battle rise of pension scammers.

A new tool has been launched to help people spot pension scams.

The Pensions Advisory Service (TPAS) has launched its online pension scam guidance tool, alongside a campaign on social media, to try to raise awareness of the warning signs that what appears to be a good investment option is actually a pension scam.

Rise of pension scams

Since the introduction of the pension freedoms a couple of years ago, scammers have increasingly seen pensions as a lucrative area to target, encouraging older people to move their money from legitimate schemes into far shadier investments. According to Citizens Advice, as many as 10.9 million people received unsolicited approaches about their pensions last year.

The TPAS said that it had been encouraged by the increase in calls from pension savers who wanted to check whether the offers they had received were genuine or not.

However, the TPAS said that while some pension scams are easy to spot, others are more complex and difficult to identify as cons, which was why it had launched its guidance tool.

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What the tool can do

It made clear that the tool cannot give users a definitive answer on whether they have been approached by scammers, instead offering guidance on spotting some tell-tale signs of less legitimate investment opportunities.

Interestingly, it also makes clear that for a user to even click through to try the tool suggests that they must have some doubts about the information received about the investment.

So for example, if you put in that you have been approached via a cold call about transferring your pension, the tool will push you towards checking that the firm which contacted you is on the FCA’s register of authorised firms and individuals.

If you report that you have been urged to transfer your cash by an unregistered firm, it delivers this warning:

“If the firm or individual who has directly advised you to transfer your pension money can’t be found on the FCA Register, you should be wary. You may be dealing with an introducer firm or an unregulated adviser who should not be giving any advice to you (the adviser could be based overseas for instance). If they do give you advice and you take it, you are not protected by the Financial Conduct Authority.”

It then suggests you find an authorised adviser.

You can give the tool a try on the TPAS website.

Missing the warning signs

Many of us are pretty confident that we could spot a pension scam, yet the evidence suggests otherwise. A report from Citizens Advice last year found that a massive 88% of us miss warning signs, exposing a mismatch between our confidence in spotting a fraud and our actual ability to do so.

Here are some of the classic signs that the ‘can’t miss’ investment opportunity you're being promised is actually a shady deal from a scammer:

Be very suspicious about any approach that comes out of the blue, whether it’s in person, online or over the phone.
If the rate of return seems too good to be true, it almost certainly is.
Scammers may try to convince you that you can access your pension before the age of 55. Doing so will see you hit with a massive tax bill, as well as likely losing your pension savings in the scam!
The caller tries to pressure you into making a fast decision - always take your time.

The new TPAS tool could prevent you falling for a pension scam. Other ways to keep safe include:

Checking the FCA’s register to ensure you are dealing with a legitimate firm.
Taking a the FCA’s ScamSmart warning list for known investment scams.

Interested in a SIPP or stocks and shares ISA? Visit the loveMONEY investment centre today

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