Protect yourself andyourpension

Know how to spot and avoid cruel scammers’ tricks

In the 27 years I have been a regulated financial planner, I have come across a pension scam twice, both related to the same company.

Unfortunately, it wasn’t obvious to the couples affected – both bright and wealthy individuals – that they had been scammed. Years later, they still don’t have their money back.

The scale of such scams is worrying. The Financial Conduct Authority says that more than £2.2million was lost to pension scammers between January and May last year.

This is according to complaints filed with Action Fraud – and they believe the number of victims is likely to be much higher because savers are not only failing to spot the signs of a scam, but they simply aren’t aware how much is in their pension pot.

Scammers targeted pensions both large and small, with losses ranging from under £1,000 to as much as £500,000. The average loss was £50,949, according to Action Fraud – double the previous year’s average of £23,689.

And while the average victim is described as a man in his 50s, this kind of fraud can happen to anyone so watch out.

It’s said that football fans approaching retirement appear to be particularly vulnerable to scams, with research showing just 43% know how much is in their pension pot. A further 45% do not know how to check if an approach about their pension is legitimate.

If someone contacts you unexpectedly and says they can help you access your pension before the age of 55, it’s likely to be a fraudster.

You can report them to Action Fraud by calling 0300 123 2040 or visiting the organisation’s website.

The average victim is a man in his 50s, but fraud can happen to anyone

Alternatively, you may be offered a tempting way to invest your pension fund – for example, in a new hotel being built in an exotic location – but don’t fall for it.

Most of these offers are fake but can appear very convincing as they appeal to your wants and desires.

But once you’ve transferred your money into a scam, it’s too late – you could lose all of your pension, and face taxes of up to 55% or huge additional fees. You can significantly reduce your risk of being scammed by only dealing with an FCA-regulated firm. This means checking the person who is giving you the advice and the firm they work for are both registered on register.fca.org.uk.

Ensure you check your adviser’s identity too – they could be masquerading as a financial expert.

The Pensions Advisory Service also has an online tool to help you know if you have been scammed.

Always act on the cautious side and if in doubt, ask a financial planner to check things over for you.

For more advice and information, search for The Money Planner podcast or visit WarrenShute.com