Different times, same dangers!
COVID-19 has impacted every area of life. Simple pleasures like going to the pub or the cinema are no longer possible – at least for time being. We’re all adjusting to the ‘new normal’ and it seems clear that in so many ways we won’t just be going back to the way things were.
There are uncertain times and many people are facing uncertain futures. Unfortunately, some things never change. The new normal has presented an enormous opportunity for one particular group: fraudsters, who prey on this uncertainty.
Action Fraud is the UK’s national reporting centre for fraud and cybercrime for people to report fraud if they have been scammed, defrauded or experienced cyber-crime in England, Wales and Northern Ireland. A cursory glance at the news page of its website highlights the current scale of the problem. Hot on the heels of news that COVID-19-related fraud attempts increased by 400% in March, Action Fraud has now revealed that there were more than 2,000 fraud cases in the past five months, with losses totalling over £5m. Pension scams were amongst the most common type of fraud and target both defined benefit and defined contribution pension arrangements.
A common tactic of the fraudsters is to target the vulnerable, making out they are in fact the good guys, seeking to help members move their pensions away from the clutches of the pensions industry. (If you’re desperate for money, that kind of approach really can work, and unfortunately is still remarkably successful, despite a UK-wide ban on pensions cold calling.)
In the last week, the two main regulators of the pensions industry – the Pensions Regulator and the Financial Conduct Authority – have published information for members of defined benefit pension schemes, who are considering the transfer of their pension savings. It sets out the risks of transferring and the types of members who are most likely, and least likely, to benefit from a transfer.
The key message from the regulators is stark: If you transfer out of a defined benefit pension, you cannot reverse it. Make sure you understand the risks to help you make an informed decision.
This comes from the organisations that exist to ensure defined benefit and defined contribution pension schemes are properly run and contains messages well worth listening to.
Whilst this regulator publication is aimed at defined benefit members it’s worth acknowledging that scammers don’t discriminate – they’re quite happy to target members of defined contribution schemes as well. Such schemes are particularly susceptible to investment frauds with scammers offering unrealistic high rates of return and often investing in overseas investments. Remember if it sounds too good to be true there is probably a reason for that!
Since the COVID-19 pandemic struck, the government’s messaging has centred around two words: Stay Safe. This should apply to people’s pensions and finances, as well as their health. These are uncertain times. Let’s not make them any more uncertain.