W
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SPOT THE WARNING SIGNS: PROTECT YOUR
LIFE SAVINGS & AVOID HIGH-RISK SCHEMES
by Sam Hulson of First Equitable
Whilst pension freedoms have brought a wide range of consumer
benefits; not least the vastly increased flexibility that is now
afforded to clients at retirement; sadly, it has also created a
lucrative opportunity for fraudsters to thrive. Anyone can be the
victim of a pension or investment scam, no matter how savvy
they think they are.
Research shows[1] that nearly one in ten over 55s fear they have
been targeted by suspected scammers since the launch of pension
freedoms. People need to be vigilant to safeguard their hard-earned
retirement savings and learn how to spot the warning signs. If it
sounds too good to be true, then it usually is; people should be
sceptical of investments that are offering unusually high rates
of return or which invest in unorthodox products which may be
difficult to understand.
CLAIMS OF GUARANTEED HIGH RETURNS
These may include cold-calls, free pension reviews, claims of
guaranteed high returns and exotic investments. They also include
time-limited offers and early access to cash before the age of 55 that
can tempt savers into risking their retirement income.
Exotic or unusual investments are high-risk and unlikely to be
suitable for pension savings. But worryingly, nearly a quarter (23%)
of the 45-65-year olds questioned say they would be likely to pursue
these exotic opportunities if offered them.
GAINING EARLY ACCESS TO PENSION MONIES
Enticing savers with early access to their pensions has also proven
to be a persuasive scam tactic. One in six (or 17%) of 45-54 year-
old pension savers say they would be interested in an offer from a
company that claimed it could help them gain early access to their
pension monies. Of all those surveyed, 23% say they would talk
with a cold caller who wanted to discuss their pension plans, despite
the Government’s ban on pension cold-calls this January.
The FCA and the Pensions Regulator have warned that 42% of
pension savers - equivalent to five million people - could be at risk
of pension scams. The study found 9% of over 55s say they have
been approached about their pension funds by people they now
believe to be scammers since the rules came into effect from April
2015. Offers to unlock or transfer funds are tactics commonly used
to defraud people of their retirement savings.
APPROACHED BY SUSPECTED SCAMMERS
Most recent pension fraud data[2] from ActionFraud, the national
fraud and cybercrime reporting service, shows 991 cases have been
reported since the launch of pension freedoms involving losses of
more than £22.687 million. The research found fewer than one in
five (18%) of those approached by suspected scammers had reported
their fears to authorities. Nearly half (47%) said the approaches
involved offers to unlock pension funds or access money early, and
44% said they involved transferring pensions.
About 28% of those targeted by suspected fraudsters were offered
alternative investments such as wine, and 20% say they were offered
overseas investments, while 13% say scammers had suggested
investing in crypto-currencies. Around 6% believe they have been
victims of fraud.
KNOW THE WARNING SIGNS
It doesn’t matter the size of your pension pot. Get to know the
warning signs, and before making any decision about your
pension it is important to check you are dealing with an FCA
authorised firm. Retirement savers can report suspected frauds
on the ActionFraud helpline 0300 123 1047 or online at www.
actionfraud.police.uk/report_fraud, and more advice is available at
www.thepensionsregulator.gov.uk/pension-scams or by calling the
Pensions Advisory Service on 0300 123 1047.
LET US HELP
At First Equitable we are passionate about building long lasting
relationships with our clients and helping them safely achieve
their financial goals and objectives. To arrange your free initial
consultation, or if you would just like to ask a few questions, please
give us a call or complete an enquiry form via our website. You can
also email me at: [email protected]
Source data:
[1] Consumer Intelligence conducted an independent online survey for Prudential
between 23 and 25 February 2018 among 1,000 UK adults aged 55+ including
those who are working and retired.
[2] www.actionfraud.police.uk/fraud-az-pension- liberation-scam
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