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Five million people at risk of pension scams, say regulators

Victims lost an average of £82,000 each to pension fraud last year

Two-fifths of people aged between 45 and 65 are at risk of falling victim to pension scams, new research suggests.

This would equate to five million people across the UK, according to a survey conducted by the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).

The results are based on responses from a representative panel of more than 2,000 people, who were asked how they would respond in six different scam scenarios. Two-fifths said they would act in a way that could expose them to fraud.

Find out how to spot a pensions scam and what you should do if you're approached by potential fraudsters.

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Pension scams: what would you do?

Pensions scams claimed an average of £82,000 from each victim's wallet in 2018.

Common early warning signs that you could be being targeted by a scammer include: cold calls, free pension reviews, claims of guaranteed high returns, exotic investments, 'time-limited' offers, and promises of early access to cash.

The survey presented respondents with six common scam tactics and found that:

  • 23% would engage with a cold call from a company asking about their pension plans.
  • 23% would pursue offers of high returns in overseas properties, renewable energy bonds, storage units, bio-fuels or forestry, despite the fact that these are high-risk investments that are not suited to pension savings
  • 17% would be interested in a firm that said it could get them early access to their pension pot.
  • 13% would pursue an offer that 'guaranteed' high returns of 11% on their pension savings.
  • 10% would agree to a free pension review from a company they had never dealt with.
  • 7% would accept a time-limited offer from a company that offered to send paperwork over with a courier to be signed immediately.

Doing any of these things could open you up to being scammed, often for large amounts of money.

Jenny Ross, Which? money editor, said: 'Pension scams are becoming increasingly sophisticated and have devastating consequences, leaving savers at risk of seeing their entire retirement income disappearing in an instant.

'It's vital that more is done to raise awareness of these scams, and that robust measures are put in place to protect people.'

Parliament's Work and Pensions select committee recently questioned the FCA's commitment to stamping out pension scams, after it emerged that there were only 10 dedicated full-time staff working on the area.

However, the FCA confirmed that there are more than 100 full-time members of staff who work on pension scams-related projects, even if this is not their sole focus.

How to spot a pensions scam

In April 2015, the government's reforms to the pensions system gave over-55s the freedom to do whatever they want with their pension pot.

Unfortunately, this also gave fraudsters the opportunity to fleece millions of people out of this money with sophisticated scams.

Scammers will usually contact you out of the blue, often claiming they can help you access your pension before the age of 55, or help you withdraw larger quantities of cash than is currently legal.

If you're contacted by someone about your pension, watch out for red-flag phrases like 'pension loans', 'early pension release', 'pension selling', 'cashing in your pension', 'free pension review' and 'pension liberation'.

Be suspicious of anyone who cold calls, texts, or emails you about your pension. Check whether the company is on the FCA's register if you want to find out more about them. If it's not on there, or it's listed as being investigated, don't engage with it.

And if any company calls you unexpectedly, hang up and call it back on the number it advertises publicly. This will help protect you from sophisticated number spoofing scams.

Reporting pensions scams

If you think you've been scammed, or been contacted by scammers, call Action Fraud on 0300 123 2040 to report it.

What can I do with my pension?

Often, scammers exploit confusion around what the pension freedom reforms really mean.

For advice on your pension, read our detailed guides:

And before you agree to anything, call the Pensions Advisory Service on 0300 123 1047 for more guidance and information.