Pension Scams – Don’t Get Caught Out!
Even people who think they’re financially aware can still be the victim of a pension scam. However don’t panic – there are several warning signs that we can all be aware of.
The Scambusters are back! In this week’s Scam Watch, James Walker from Rightly and Louise Baxter from the National Trading Standards Scams Team give you the know-how that will help you avoid getting caught out.
It’s time to take control, know how to spot a scam and what to do about it.
Tax-free loopholes? A risky business
Pension scammers will try to persuade pension savers to transfer their entire pension savings, or to release funds from it, by making promises and creating a sense of urgency – for example, “act quickly or you’ll miss out”.
Sometimes scammers suggest that pension savers can access their money ‘tax-free’ by exploiting special loopholes.
But there’s a serious risk that savers could not only lose their money to the scammers, but also face a serious bill from HMRC. This is especially the case if all this happens when the saver is under the age of 55.
Sneaky ways round the cold call ban
The Pensions Regulator highlights several warning signs of a pension scam. Remember that cold calling about pensions is illegal and a likely sign of a scam.
Cold calls used to be the scammers’ most common method of approach. Since the cold-call ban was introduced in 2019, their tactics have evolved. Some have moved on to sophisticated models, making contact through social media. Or they have been known to use friends and family to reach new groups of people.
Social media is a new hunting ground for scammers
Get to know the signs of a pension scam
Keep up to date with current and evolving scam tactics and get to know the signs of a pensions scam:
- Look out for phrases like ‘free pension review’, ‘pension liberation’, ‘loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’
- Beware of guarantees they can get better returns on pension savings
- Be wary of help to release cash from a pension before the age of 55, with no mention of the HMRC tax bill that can arise
- Watch out for high pressure sales tactics – time limited offers to get the best deal; urging you to act fast to avoid missing out
- Don’t be drawn into unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections
- Don’t be bamboozled by complicated investment structures
- Don’t be tempted by long-term pension investments. Often people who transfer in to these do not realise something is wrong for several years.
They don’t always get away with it…
The Pensions Regulator is fighting these scammers, and have had some success.
In April 2022 it was reported that a man and woman who scammed 245 people out of £13.7 million in pension savings have been jailed. Alan Barratt (62) and Susan Dalton (66) tricked hundreds of people into transferring their pension savings into ten schemes, which they controlled.
The average victim was conned out of £55,000, but some people lost much more. But years after the criminal acts happened, the money has not been recovered.
Scambusters Mailbag
Pic: Shutterstock
A friend thought she was applying for universal credit but got scammed instead. How is this happening?
Scambusters say: “Scammers purporting to be from the Department of Work & Penson (DWP) and other organisations are targeting those who are applying for Universal Credit and Personal Independence Payment (PIP) as the cost of living crisis worsens. Scammers have also been targeting individuals with false Council Tax refunds and energy bill rebates.
“We urge anyone receiving such offers to take advice from reputable sources such as the GOV.UK website. Follow the official guidance given there for applying for financial assistance.”
Tip of the week
Take a moment to stop and think about the consequences of parting with your personal or financial details if someone asks for them. No matter who calls you, hang up the phone if you receive such a call. Then phone or email the organisation back on a phone number or email address you have researched yourself.
Your scams checklist
Remember: If you’ve received a text you think is a scam then you can forward it to 7726. Or take a screenshot and send it to report@phishing.gov.uk.
If you are receiving lots of unwanted phone calls or text messages you can also consider removing your details from data brokers. Doing this ensures that you use a right to object to processing of your data.
You can learn more about this on Rightly to stop the sharing of your data exposing you to scams.
You can take a free training course on how to fight against scams on www.friendsagainstscams.org.uk.
Find more savvy ways to save money and avoid pitfalls in every issue of My Weekly magazine, and in the four-weekly My Weekly Special. Find them in newsagents and supermarkets, or take out a subscription and save pounds!
