Those aged 55 and over are being exposed to a new wave of potentially fraudulent pension phone calls, emails and junk mail, Which? research has found.
A third of over 55s have been contacted about their pension by potentially fraudulent companies but many aren’t sure they can spot a genuine investment and four in ten think they could fall victim to a scam.
If you’re not sure if an offer is legitimate, follow our tips on how to spot a pension scam.
Contacted out of the blue
Six weeks after the pension reforms came into effect, Which? research has found that a third of over 55s who aren’t yet retired have already been contacted out of the blue by someone looking to sell them a potentially dodgy pension product.
Two in five of those contacted were approached in the months before the reforms began (between 1 January and 6 April 2015), which is double the number who said they were contacted in the whole of 2014.
The most common approach was by telephone – so be on your guard if you get a call out of the blue.
Spot the investment scam
The most common sales pitches were offers of investment opportunities, a free pension review, offers to unlock your pension or access to your pension pot early.
Worryingly, only half of those approaching retirement said they’d be able to identify a legitimate pension investment and nearly four in ten think they could be tricked into a scam.
In a separate Which? investigation into investment scams, we secretly recorded the telephone pitch of a dubious scheme to expose the tactics they use to snare unfortunate investors.
Which? investigation into dodgy investments
We found an unregulated investment scheme being advertised online, and after investigating the promotional literature, we called the firm behind the scheme, posing as a potential investor.
We were offered the chance to invest £20,000 in a share of a car park near a busy airport, but the scheme wasn’t all it seemed to be.
Although we were promised a guaranteed return, buried in the small print were terms which meant you could lose everything you invest.
Listen to the sales pitch
The tell-tale signs of a scam
Watch out for certain tell-tale signs to avoid being caught out by an investment scam. Click the audio links below to listen to the sales pitch again :
- ‘8% for the first two years’ If it sounds too good to be true, it probably is. Many dodgy schemes could pay out initial returns to keep you hooked, but lacking a genuine business plan, they’re destined to collapse.
- ‘Better than bank rates’ Scammers are taking advantage of historic lows in savings interest rates. No legitimate scheme would make this misleading comparison without being upfront about the risks.
- ‘Money-back guarantee’ The buy-back in the scheme we were being sold was entirely at the discretion of the investment firm – a fact they buried in the small print.
- ‘Paperwork from UK solicitors’ Whilst references to solicitors help lend an air of respectability, the lawyers’ involvement doesn’t tell you anything about whether the scheme is viable.
Millions made more accessible to scammers
Which? executive director Richard Lloyd said: ‘Recent pension reforms have given people welcome freedom to access their money as they wish, but this has also made millions of pounds more accessible to scammers.
‘With a rise in the number of people being contacted about their pension in recent months, people should be on their guard if they’re approached out of the blue and think very carefully before handing over any money.
He added: ‘We want the government and regulators to do more to warn people about these types of tricks and do all they can to stamp out the sharks behind them.’
The Which? Better Pensions campaign is calling for the government and regulators to do more to increase awareness and prevention of scams and unregulated investment schemes.