How to protect your pension pot

YOUR pension is the key to a happy retirement and any steps you take to access it or boost it must always be approached with caution.

People over 55 now have greater access to their pension pots, which is good news. But this has also opened the door to crooks who want to get their hands on your hard-earned cash.

Pension fraud has already cost savers over £1.8million this year according to Action Fraud, the national fraud-reporting centre.

And that is just the tip of the iceberg as far as financial scams go. They have rocketed during the pandemic with people reporting average losses of £45,242 to “clone-firm” investment schemes.

These people thought they’d invested with genuine firms to find out they are fraudsters, and there is no guarantee they will get their money back. Pension scams destroy lives, leaving people who have saved for years struggling to make ends meet during retirement.

The scale of the problem is huge, so how do you protect yourself from these scams?

Be careful online

When the Financial Conduct Authority researched what led people to fall victim to pension scams, they found that people were nine times more likely to accept advice from someone online than they would from a stranger in person. Scammers will try to approach targets in a nonnatural way, often adding a time pressure for making important decisions. Reputable advisers will never rush you into such important and often irreversible pension decisions.

Andrew Tully, technical director at Canada Life, warns: “If you wouldn’t trust a stranger’s pension advice in the pub, don’t trust them online. If it looks too good to be true, it inevitably is, so walk away. There simply is no such thing as a legal get-rich-quick scheme.”

The Government has recognised the dangers that exist online as financial scammers use more sophisticated ways to target victims. The much talked about Online Safety Bill, on its way through Parliament, will require online platforms such as Twitter, Facebook, Instagram and Google to protect users not just from user-generated scams, but also from pre-paid fraudulent adverts.

Two prolific pension scammers have just been jailed for their part in a series of scams in which 245 people lost millions in pension savings. Alan Barratt, 62, and Susan Dalton, 66, tricked people into transferring savings to schemes supposedly investing in property or “truffle trees”. The sad part is many of those conned are unlikely to see their money again.

Can I access my pension early?

Pension freedoms, introduced in 2015, mean most people can access their pension from age 55. If anyone approaches you offering you a way to access your pension earlier than this, this is highly likely to be a scam. Only in very specific circumstances, such as in the case of a terminal illness, are you able to access them earlier.

And 55 is just the minimum age, and like speed limits, should not be seen as a target or trigger point to access your pension. Especially if you plan to continue working.

So, it is vital you follow our tips to keep your pensions safe.

8 GOLDEN RULES TO KEEP YOUR PENSION SAVINGS SAFE

‘‘ Like the speed limit, 55 should not be seen as a target to access cash

1 Warnings that the deal is limited and you must act now. This is a clear pressure tactic. Making any financial decisions should never be done under pressure. Reputable firms will never pressure you to make a financial decision, they will always give you time to evaluate and make an informed decision.

2 Be wary of unsolicited offers of “amazing investment returns” or of “guaranteed investment returns”. Investing is a matter of risk versus gains, and there is always the chance of losing some or all of your money.

3 Be wary of “free pension reviews”. You can get free guidance via the Government’s Pension Wise service (money helper.org.uk – click on pensions and retirement).

4 Alarm bells should be ringing... if you are told you can access your pension before age 55.

5 Never disclose any personal details if you are contacted out of the blue. This includes phone calls, emails or text messages. Don’t confirm your name, email address, national insurance number or date of birth. Always contact your pension firm via a trusted number or their official website.

6 You are discouraged from seeking professional financial advice or from talking to Pension Wise or the Money and Pensions Service. No reputable firm would do this. Always check and double check and speak to a family member or close friend before making any decisions.

7 Be very wary of any recommendation to take or transfer a large amount of money, or your whole pension pot. Either in a lump sum or in chunks to invest in high-risk investments like overseas property, forestry, car parking or storage units.

8 Seek professional financial advice. A regulated financial adviser will be able to explain the rules and tax implications of the different options available to you and can help you make the best choices for your circumstances. You can find an adviser near you via unbiased.co.uk or vouchedfor.co.uk.

Check the FCA scam-smart website before acting – fca.org.uk/ scamsmart.