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Maintaining vigilance against pension scams

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I was pleased to be asked to speak at the Pensions Management Institute’s PensTech and Admin Summit yesterday, on the topic of pension scams.

Just a day later, as part of their joint ScamSmart campaign, the Financial Conduct Authority and the Pensions Regulator have revealed that a typical pension scam victim stands to lose 22 years’ savings in just 24 hours.  They have come to this conclusion based on their research showing that it can take a saver 22 years to build a pensions pot of £82,000 – and this is, on average, what individual scam victims lost in 2018.  They also discovered that nearly a quarter of people (24%) admitted to taking no longer than 24 hours to decide on a new pension offer.

A report released last April, by HM Inspectorate of Constabulary and Fire & Rescue Services, found 842 organised crime groups believed to be involved in UK fraud at the beginning of 2018.  All of them would just love to remove your pension from you, with the report going so far as to say that the elderly were ‘under siege’ from scammers.

Since 9 January 2019, it has been illegal for someone to cold call you (this includes contacting you by telephone, text message, e-mail etc.) about your pension benefits, meaning that any unsolicited communication about your pension should raise an immediate red flag.  The criminals’ first approach is often to offer you a free pensions review to hook you in.   It’s vital to remember that such tactics really are effective, and it can be surprisingly easy to fall for them regardless of how generally aware and well-educated someone might be…!   As the ScamSmart research found, those with a university degree are 40% more likely to accept a free pension review from a company they have not dealt with before than those without.

It’s not possible to stop people losing their pension savings to fraudsters, and everyone is potentially vulnerable – a recent Pensions Ombudsman case involved a serving policeman who fell for such a scam.  But the criminals will be a lot less successful if the potential victims realise that anyone approaching them who they don’t know, out of the blue, and offering to review their pensions is already committing a criminal offence.  You should also know that if you become victim to a pension scam, there will be an added insult to injury: you will get a large tax bill from HMRC, as it views money taken from your pension arrangement in this way to be an unauthorised payment.

Losing your pension savings can be devastating.  Ultimately, the first line of defence against criminals looking to steal your pension is you.  As the ScamSmart campaign makes clear, make sure your lifetime savings stay yours.

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