Beware! Pension scammers are preying on the over 50s!

Published: 31/07/2015

The alarming news that nearly 200,000 people with an average age of 74 are on a ‘suckers’ list circulated by fraudsters broke this week. National Trading Standards reports that its scams team has saved people more than £5m in the past three years by taking action on scams. Its investigations have revealed 10,843 victims who have lost an average of £1,184 each. Everyday Legal examines this worrying activity.

Pension freedoms are proving to be very popular with 235,000 people taking out more than £1.8bn from their pension pots in the first two months of this new regime. The Association of British Insurers said that in April and May 2015 savers took out more than £1bn in 65,000 pension pot withdrawals – that’s an average of £15,500.

Who is being targeted?

A recent survey conducted by YouGov reveals:

  • 17% of people over 50 rising to 20% of over 55s have been contacted by a company with an offer to help them access their pension early
  • 22% of men aged over 50 have been contacted, compared with 10% of women

How is the contact made?

  • 50% via telephone
  • 24% by post
  • 23% via email or other online contact

More generally, Citizens Advice report that 41% of scams reported to them come from a cold call whilst 18% are generated online.

What do the scammers offer?

With the recent introduction of pension freedoms scammers are offering the opportunity to liquidate their pension savings before they reach the age of 55 or other ‘get rich quick’ schemes. They often talk about ‘legal loopholes’ or ‘one-off investment opportunities’, one pension firm reports that 80% of the requests for overseas transfers they receive are scams to defraud savers from their pension.

Protecting yourself from scammers

Spotting pension scammers

  1. They offer to help you access your pension savings before you reach 55 – this is generally not possible.
  2. They suggest you withdraw much / all of your pension pot to invest elsewhere – there are tax implications if you do this and it is generally not recommended.
  3. They pressurise saying the deal offered is limited.
  4. They discourage you from consulting a pension adviser.
  5. They aren’t on the Financial Conduct Authority (FCA) register (this records all regulated firms and individuals).

Protecting your identity

  1. Take care to shred all personal information.
  2. Only give out your personal information when absolutely necessary and do not sign up for anything without thoroughly investigating the company / commitment you are making.

Spotting and dealing with scammers who phone you / email you

  1. Always ask for the name of the person you’re speaking to and the name of the company they are calling from. Call the company Head Office yourself on a different phone line in case the scammers are holding the line open.
  2. Never give out your personal details, credit or online account details over the phone unless you called them and the phone number came from a trusted source.
  3. Do not respond to text messages or calls from numbers you don’t recognise – if it’s genuinely important they will contacNever believe that a caller is ringing from a company just because that company’s details appear on your caller display – scammers can clone the telephone numbers of companies they are impersonating.
  4. Never reply to spam emails – delete them without opening them.
  5. 6Don’t click on a link in an email to access your account – legitimate financial institutions would not send you emails asking you to do this.
  6. Don’t trust any contact details in a spam email.
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