Alexis Conran's top tips to avoid pension scams
Pension scams are on the rise. A survey by pension provider Scottish Widows found 18% of men had been targeted at least once by scammers, and 28% of savers are anxious about falling victim to fraud.
Alexis Conran is here to share the most common pension scams to look out for including investment fraud, pension-liberation schemes, clone firms, cold calls from pension companies, and even entire fake pension schemes.
The 5 big pension scams to look out for:
1) Cold calls from pension companies:
If you ever receive an unsolicited call from a pension company, hang up the phone immediately. The practice of making cold calls about pensions is now illegal, so any firms trying to sell this way are breaking the law.
These scams are all about getting their hands on pension lump sums that pensioners may have taken out. The scammers have amazing phone etiquette and often create a personal connection with the caller. The longer they keep them on the phone, the better for the scammer. The caller would then get the person to transfer money. Elderly people are particularly vulnerable to this.
2) Investment fraud:
This involves scammers persuading savers to transfer their pension funds into risky or false investments with the promise of high or guaranteed returns. These can include overseas property, parking garages, and storage units.
These assets are typically unregulated and likely to fail. In some cases they don't even exist.
3) Clone firms:
These are fake companies set up with names and registration data that deliberately mimic those of legitimate businesses. The Financial Conduct Authority maintains a growing list of clone firms.
4) Pension-liberation schemes:
Pension-liberation schemes are also common. Fraudsters will target people worried about the cost of living crisis who are looking to tap into cash they have previously saved in a pension.
Regulation makes it almost impossible for savers to access such cash until they reach age 55, unless they are prepared to hand over more than half the money in tax penalties.
Scammers claim to have identified loopholes to get around the rules. Not only are their claims false, but the scammers often take charges of 30% or more.
5) Fake pension schemes and pension providers:
Some fraudsters go as far as setting up bogus pension schemes and pension providers. These arrangements typically promise better returns than existing pension schemes, and are often associated with high-pressure sales tactics. Fraudsters then walk away with savers' cash.
How to avoid pension scams?:
These scams are outright frauds, but the Pensions Regulator also wants savers to be on their guard against practices that might not be illegal, but which would still cause them harm.
Watch out for buzzwords such as pension liberation, loan, loophole, savings advance, one-off investments and cashback as well as guarantees on better returns.
High pressure sales tactics, where scammers trick you into thinking an offer is time limited, are also a giveaway.
Anyone promising to release your pension before your retirement age without mentioning the tax bill should also not be trusted.
How to report a scam:
You should report a scam to the authorities if you believe a scam has already happened, if a red flag is raised while making a transfer, or if you suspect a pension scam could be taking place.
You can report fraud, cyber crime and concerns to Action Fraud online or by phone. You can also get in touch with the Financial Conduct Authority and The Pensions Regulator.
The key message is to report to Action Fraud.