Pension savers are being warned by the government, regulators and financial services bodies about the danger of being tricked out of their lifetime’s savings.
This latest warning comes after Which? found a third of over 55s had been contacted about their pension by potentially fraudulent companies.
Our research – carried out just six weeks after pension reforms came into effect in April 2015 – found many weren’t sure if they could spot a genuine investment opportunity.
In addition, two in five people feared they could fall victim to a scam and lose all their pension savings.
People are being urged to arm themselves with information so that they can recognise the hallmarks of pension scams.
How pension scams happen
Fraudsters will often contact victims out of the blue offering them early access to their cash or promises of get-rich-quick schemes, but the reality is they’re nothing more than elaborate hoaxes.
The hidden nature of pension scams is such that it’s difficult to calculate exactly how much money has been lost, although recent estimates suggest it’s close to £1bn.
Earlier this year Which? executive director Richard Lloyd said: ‘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.’
Savings almost lost to ‘free pension review’
One man came within a whisker of handing over his entire pension pot of £90,000, but avoided doing so after checking with official government services.
He was contacted in 2014 and offered a free pension review.
After persuading him to sign a form authorising the release of his pension information, he was then visited by someone posing as an independent financial adviser.
This so-called independent adviser then offered him the chance of investing his money in overseas property.
Suspecting a scam he didn’t part with his cash and passed on details of the scheme to Action Fraud, the hotline for reporting pensions and financial scams.
As a result of an increase in this kind of activity, the government and regulators are warning individuals to be extra vigilant and to report and activity they suspect as fraudulent.