Managing Director of the 4dentists group, Richard Lishman, looks at pension scams and steps that can be taken to protect against them.
Pensions have always been a hot topic of discussion for the media, and recently they hit the headlines again due to growing concerns over pension scams. According to reports, a total of 253 victims reported to Action Fraud in 2017 that they had lost more than £23m to pension scammers, equating to an average loss of £91,000 per victim. Though it is predicted that as many as 107,000 people between the ages of 55 and 64 could have actually fallen victim to scams last year, suggesting the problem is much larger than the available numbers indicate.
In light of these worrying statistics, the Financial Conduct Authority and the Pensions Regulator have joined forces to launch a new advertising campaign about the risks of pension fraud. It is hoped that the ‘ScamSmart’ campaign will help to raise awareness and reduce the prevalence of scams in the UK – and in the long-term, speed up the government’s plan to introduce a pensions cold calling ban. So how does the scam work?
Invariably it starts with an unexpected call, email, letter or text offering an investment or business opportunity, or a free pension review to discuss the ways in which to invest pension money and claim before the age of 55. Many promise great returns over a short period of time or tempting investments that seem convincing, such as investing in a new hotel, business venture or green energy scheme. Unfortunately, once the money has been transferred into a scam it’s too late to do anything, so to make sure you don't lose your pension money and in turn incur a hefty tax bill or additional fees, you will need to be extra vigilant moving forward.
One simple way to protect yourself is to reject unexpected offers – if you’re called out of the blue and you don't know who they are then hang up. Likewise, do not respond to any offers received via email, letter or text. The chances are it’s a scam, especially if the proposal seems too good to be true. You can also check the Financial Conduct Authority’s (FCA) register to confirm whether an individual or company is FCA authorised. If they’re not on the list then they’re not a real company – though be warned that a company may be calling under the guise of a registered firm so be sure to use the contact details on the register, not the details you’re given to confirm validity.
Take your time to do this, even if it means turning down what seems like an unmissable deal, as fraudulent companies will often make out like what they’re offering is time-limited in the hopes of rushing your decision. It’s one of the oldest tricks in the book; and one that you should be wary of.
Where possible, it is also prudent to be proactive as well as reactive, because if you want to fully protect your money you can’t leave your pension to chance. There are companies out there that can provide impartial advice and work with you so that you get the most from your investments – the trick is finding the right one that is equipped to offer the advice that you need. Tied and multi-tied advisers, for instance, are restricted in the range of products and/or product providers they are able to offer, limiting your options. For optimal results, you need an Independent Financial Adviser (IFA) that provides unbiased and unrestricted advice on all types of products from a large number of firms, such as the specialists at money4dentists. The long-standing firm is authorised and regulated by the FCA, so you can rest assured that you’re receiving genuine advice from a trusted expert.
An IFA will work with you to gain a full understanding of your circumstances and requirements, and will always provide supporting evidence of their suggestions in writing to make sure you are fully informed. This is invaluable for ensuring the safety of your pension and that you get the most from your money.
Scams have always been a threat for anyone with a pension, but now more than ever it seems that savers must be mindful of these schemes and arm themselves against potential threats. To protect your money, take a proactive approach with your pension.
For more information please call 0845 345 5060, email firstname.lastname@example.org or visit www.money4dentists.com
BBC News: Pension scam victims ‘lost 91,000 each’. Published 14 August 2018. Accessed online 16th August 2018 at https://www.bbc.co.uk/news/business-45170408
Financial Conduct Authority: Financial Lives survey. First published 20 June 2018. Accessed online 16 August 2018 at https://www.fca.org.uk/publications/research/understanding-financial-lives-uk-adults