Victims of pension fraudsters lost an average £91,000

Pension Fraud is a rapidly growing crime, and it has a massive financial impact where some basic estimation finds each victim suffered more than £75,000 on average (in 2021). 

The pension statement lately has been affected, but the increasing cost of living as the retirees aiming to get a basic standard of living found an increase of 18 per cent in the living costs in 2022. Though losses can run in millions, an accurate average can be difficult to find. 

Fraudsters in pension scams target senior citizens as they have more time to build wealth than younger adults and often have substantial assets, savings and retirement accounts. 

Some pensioners are vulnerable due to ageing and health issues, and some live alone and trust strangers due to loneliness. Mostly they may not report fraud due to embarrassment or fear they may be considered incapable of managing their finances. 

The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) urge people to be vigilant when they get any unsolicited offers about their pensions. It has been found that just 29 per cent of the pension frauds reported on average are sent for police investigation. 

Pension is a long-term investment, and pension savers must not follow any professional advice from unknown or unreputed advisors in a hurry with the sense of almost constant crisis. 

Pressure and crisis tactics are most common as it creates opportunities for scammers to earn through anxieties of the targets, promising them better, higher, and immediate returns that they might have never realized before. 

With the backing of new technologies and data-gathering techniques, scammers continue to evolve. Earlier, they were cold calling which was banned in the UK in 2019, and in 2022, they were cold calling the target from outside the UK. 

They target people aged 55 or above to invite them to spend their retirement savings, or they try to earn huge fees for giving unsuitable financial advice to the target. 

The FCA and TPR have launched a joint TV promotion campaign to raise awareness related to pension scams to help people learn about the tactics used by fraudsters.

Highly sophisticated scammers force people into transferring funds from their pension account into fraudulent schemes; the victims lose their life savings and are left facing retirement with limited income.

The FCA and TPR want people to know about the tactics used by pensions scammers, like the ‘free pension review’ or investment plans to get higher returns. One of the most common methods to commit such scams is cold calling, and some of the other alerts are 

Unanticipated queries about your pension via phone, post or email. Promises of guaranteed high returns and downplaying the risks.

• Offering unbelievable or overseas assets not regulated by the FCA, e.g. overseas hotels, forestry, and green energy schemes.

• Pressure tactics include time-limited offers and sending a courier round with documents and paperwork to sign.

• Claiming to be able to unlock money from an individual’s pension (which is normally only possible from age 55).

• The FCA and TPR urge the public to be ScamSmart with their pension and always check who they deal with.

If you are over 50 and have a defined contribution pension and want to get free impartial guidance, you can book an appointment with MoneyHelper service Pension Wise to make informed decisions; where you are offered a conversation with a fully trained specialist, and your conversation can last up to 60 minutes. 

In addition, you can ask questions related to tax and other benefits and shop around to avoid scams. 

How Does It Work?

The pension scams involve fraudulent companies or individuals who try to persuade you to transfer pension savours or entire pension into another account overseas or release funds from it to another account where they promise to offer better earnings. 

The scammers give tempting offers and make use of intimating pressure sales tactics only to transfer or invest the pension into unregulated suspicious investment structures or other high-risk plans like –

• Overseas property and hotels

• Renewable energy bonds

• Forestry

• Parking or storage units

Or they may just transfer the funds or steal your funds as the schemes are continuously evolving, and anyone can be a victim, no matter how tech-savvy you think you are; you must be aware and see the warning signs as given below – 

• The service provider recommends transferring money to a single overseas scheme where you are promised to get 8 per cent or higher returns. Decline unexpected pension offers, whether made online, on social media or over the phone.

Ensure who you’re dealing with before changing your pension arrangements.

Don’t be rushed or pressured into making any investment decision. Instead, consider getting impartial advice from a reputed legal and personal financial advisor.

If you think you’ve been a victim of a pension scam, report it. Then, visit ScamSmart to find out more.

FCA and TPR are part of Project Bloom, a multi-agency task force working to combat pension scams. 

Source - Action Fraud Police UK