Most people failing to spot potential pension scams Research finds nine in 10 miss common signs of pension fraud

31 March 2016

Pension changes

Nearly nine in 10 people miss common warning signs of a pension scam, falling for the promise of unusually high investment returns or offers of ‘free financial advice’.

A study from Citizens Advice showed mock adverts to UK adults and asked which one they would be most likely to pursue.

Just 12% opted for what would have been a legitimate pensions ad, promising returns of 5% and stating the firm was authorised by the Financial Conduct Authority (FCA).

Never be rushed into making a decision on your pension pot. A lifetime’s savings can be lost in a moment. Our guide tells you how to avoid potential pension scams.

New pension freedoms, new risks

New pension freedoms were introduced nearly a year ago to give people aged 55 and over more choice on what they do with their retirement pot.

But concerns have been raised that the freedoms also give fraudsters extra opportunities to scam people out of their cash.

Despite the findings from Citizens Advice, the research - which surveyed 2,000 people - found that many people felt confident they could spot a fraudster.

Three-quarters of respondents said they were confident they could identify a pension scam even though just 12% were actually able to do so when a scam was presented to them.

Don't trust unsolicited contact 

The report also reveals that people are particularly at risk of scams from phone calls, post and emails that appear to come out of the blue. 

Citizens Advice estimates that up to 10.9 million consumers received unsolicited contact about their pension in the past year.

Six weeks after the pension reforms came into effect in 2015, Which? research found that a third of over-55s who weren’t yet retired had already been contacted out of the blue by someone looking to sell them a potentially dodgy pension product.

Any contact out of the blue should be treated with caution. 

Check the FCA's register of regulated financial services providers which will tell you if the company is registered as well as listing any companies being investigated.

Don’t proceed unless you are absolutely certain your money will be safe. Once you transfer, it’s too late.

In addition to the significant financial losses for consumers, scams can pose a risk to the wider confidence in the pensions system. 

This can negatively affect consumers' saving levels, investment choices, use of pension freedoms and use of financial guidance or advice.

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