Tips For Avoiding Pension Scams
The biggest pensions shake-up in more than a century took place on April 6th, 2015, when Chancellor George Osborne’s far-reaching reforms gave the over 55s complete control over their company and personal pension pots.
However, such free access to their lifetime’s savings for hundreds of thousands of people means that sharks are circling, looking for easy pickings. Around half of the over 55s were approached by scammers even before the reforms came into force.
Inevitably, there has been an increase in the number of pension scam victims and the Government has done little to address the problem. However, there are a number of precautions you can take to ensure that your hard-earned money stays out of the hands of the swindlers.
- Fraudsters approach their potential victims by cold calling, or by text messages, or even in person at your door. Financial Conduct Authority (FCA) regulated companies are very unlikely to do this. Don’t give any personal or financial information. Hang up. Ignore the text. Close the door.
- Hang up on calls from anyone claiming to be contacting you as part of a government initiative. This is simply an effort to appear legitimate.
- Be wary of phrases such as ‘legal loophole’, one-off investment opportunity’, ‘free pension review’ and ‘cash bonus’.
- Don’t listen to promises to liberate your pension before the age of 55. This is not allowed under the new rules.
- Resist any form of pressure. Scammers like to push their victims into acting rashly, either by bullying them or by applying more subtle forms of persuasion, such as claiming that an opportunity is only available for a limited period, or by offering a bonus if you sign up before a set deadline. No legitimate adviser would attempt to make you rush a decision about your pension. Con artists will avoid giving you a cooling off period.
- Avoid tempting-sounding offers of so called guaranteed investment schemes. These might involve overseas investments, transfers of your funds to other countries, or might be described in appealing terms such as ‘environmentally friendly’ or a ‘new and exciting industry’.
- Ignore investment scheme promotional brochures which turn up out of the blue. Scammers often use these to make a later cold call seem legitimate by reminding you of the brochure you received.
- Never sign up for or agree to anything without first consulting someone you trust, such as an unbiased financial adviser registered with the FCA. See http://www.fca.org.uk/register
Essentially, it’s a question of trusting no-one who approaches you. If you require investment advice, seek it out in your own time from an FCA registered source.
