Action Fraud has revealed that two people have reported to the service, that they have lost more than £1 million each to pension scams. However, Action Fraud believes this is only the tip of the iceberg as many victims never contact the authorities to report it and so the total amount of people who have handed over such large pension pots is unknown.
In 2017, the average loss of pension scams was £91,000. Victims reported receiving cold-calls, offers of free pension reviews and promises that they would get high return rates, all of these promises are warning signs of fraudsters targeting you.
Earlier this year, a pension cold calling ban came into effect, and firms who continue to cold-call pensioners could face huge penalties of up to half a million pounds.
Nicola Parish, TPR’s Executive Director of Frontline Regulation said in a statement to Action Fraud: “Victims of scams are often traumatised by what has happened to them and many inevitably are left questioning how they are going to afford to retire. The average loss of a victim is £91,000 but these Action Fraud reports show that people can lose mush, much more. However large your pension pot, you must be vigilant and able to spot and avoid a scam.”
Pauline Smith, Director of Action Fraud said: “ These statistics prove that the consequences of falling victim to a pension scam can be devastating. Victims can lose their life savings and are left facing retirement with little or no income. This is why it’s so important that you are vigilant if you receive an offer about your pension out of the blue and that you check who you are dealing with. If you think you have been the victim of pension fraud, please report it to us”.
How Pension Scams Work:
Investors are often called out of the blue. Scammers will contact you via email, post or cold-call you. Free pension reviews are designed to persuade you to move money in your pension pot, into a high-risk scheme. Then, one of a few things may happen, depending on the type of scam. Some of these investments are outright scams and the fraudsters simply pocket your pension and run, whilst others may invest in unusual schemes, such as overseas property, forestry, storage units, care homes, biofuels or businesses you may not be familiar with. You may be promised guaranteed returns, or a cash sum to tempt you. And as they are promoted as long-term investments, it could be several years before you realise something is wrong.
Cold calling is currently, by far, the most common method used to initiate pension fraud. The issue is so serious, the government has announced new measures to protect people from pension scams. These actions, once in place, will include a ban on cold calling in relation to pensions, tightening of rules to stop scammers opening fraudulent pension schemes, and tougher action to prevent the transfer of money from occupational pension schemes into fraudulent ones. The ban on cold calling pensioners was due to come into force this summer but has been delayed until Autumn, according to the government.
Regulators recommend these simple steps to protect yourself.
- Do not trust unexpected pension offers, whether online, on social media or over the phone.
- Check who you are dealing with before changing your pension arrangements. Contact the FCA if you are unsure and before you enter any agreement
- Do not be rushed into making a decision about your pension
- Get impartial advice and information
- If you think you have been a victim, report it immediately