How to avoid pension scams

desk ad phone reflecting financial graphsThe Financial Conduct Authority (FCA) and The Pensions Regulator have joined forces in a campaign to help put a stop to pension scams.

Scam victims lose an average of £91,000 each to fraudsters who hone in on pension savings pots.

It’s thought that since April 2015, when pension freedoms were introduced, fraudsters have been targeting the over-55s with promises of huge returns on their investments over short periods of time.

A YouGov poll conducted by the FCA found that over-65s with savings in excess of £10,000 are three-and-a-half times more likely to fall victim to fraud, and that 32 per cent of pension holders wouldn't know how to check if they're speaking to a legitimate adviser or provider.

Low interest rates are cited as a factor in people seeking better returns on pension lump sums by unknowingly investing in unregulated products such as wine, diamonds and land.

Pension scams can be hard to spot, and scammers can be articulate and financially knowledgeable, with credible-looking websites, and marketing materials that are hard to distinguish from the real thing.

Follow four simple steps

The FCA has issued its ScamSmart four simple steps to protecting yourself from pension scams:

  • Reject unexpected offers: if you get a cold call about your pension, or a pension review, the safest thing to do is hang up. If you get unsolicited offers via email or text, ignore them.
  • Check who you're dealing with: search the FCA register  and FCA warning list to make sure that anyone offering advice or other financial services is FCA authorised, and is not a clone of an authorised company with different contact details etc.
  • Don't be rushed or pressured: take time to make the checks and be wary of anything that sounds to good to be true.
  • Seek impartial information or advice: nearly half of those investing in unregulated products via an unauthorised firm do so without getting professional advice or checking the FCA’s warning list. You should seek financial guidance or advice before you change your pension arrangements.

If you suspect a scam, you can report it to the FCA, Action Fraud or the Information Commissioner’s Office. You can also ask the Pension’s Advisory Service for help if you are unsure of what to do at any stage.

Read more at BBC Business and see the FCA's ScamSmart resources

See also