The cold-calling pension scam

Picture of the phone representing cold calling pension scam

Pensions

MoneyPlus Features Team

21st November 2016 at 11:00am

“Beware of cold callers offering free services and dream deals,” says the Pensions Advisory Service (PAS)

PAS is warning people to remain on guard as there has been a distinct rise in cold calling in the wake of the pension freedoms of April 2015.

Scamming on the up

There’s mounting evidence that fraudsters are using the freedoms to trick people into parting with their life savings by cold calling them with offers that could include “once in a lifetime” investment opportunities or “free pension reviews”.

Police have disclosed that reported fraud has risen 80% since freedoms were introduced.

Michelle Cracknell, the head of the official government-funded helpline, says “people are cold calling and if you don’t have a level of knowledge about how your pension works you can very easily get suckered in.”

Fraud has risen 80% since Pension Freedoms of April 2015

Always be suspicious would be her advice. “The good financial advice companies don’t need to cold call. Government services don’t cold call. We all know how many calls we have received on PPI or if you’ve had a car accident. That’s [PPI] coming to an end and pensions are incredibly vulnerable. People don’t understand what they’ve got. We would like every customer to refuse to take cold calls on their pension funds.”

Unsure about what the Pension Freedoms could mean for you.  Jamie Jenkins explains all in our video here.

When it’s gone… it’s gone

And the chances of getting your money back if you’re defrauded are slim.

She said that the criminals are often “very hard” to find: “It’s incredibly difficult because they move from company to company to company, so it takes a long time to follow the trail. The costs of doing that are quite significant. A lot of the companies are registered abroad; the ones that we have seen are Malta, Gibraltar and Bermuda.”

Be vigilant – refunds are difficult to come by

She added: “Our responses [to people who have lost money] are now quite blunt. We need to make customers aware that whilst they should report it, the reality is that even if the pensions ombudsman rules in your favour, the chances of you getting your money are next to zero.”

So what should you be watching out for?

The best way you can protect yourself is by staying alert.

As forewarned often means forearmed, here are three popular pension scams to watch out for. If you receive a call on any of the following, you should treat it with a good degree of suspicion. 

Scam #1 – Pension liberation

This scam targets people who may be in financial difficulties and may wish to access their pension early. Unfortunately for the saver, huge chunks of their pension pot will be eaten up by fees, charges and taxes which can leave savers financially devastated.

Find out more about so-called ‘Pension Liberation’ here.

Scam #2 – The one-off investment opportunity

With savers having to deal with very low interest rates over the past few years, scammers promise savers impressive rates if they move their pension pot into an amazing one-off investment opportunity. As you might expect, savers don’t ever see their money again.

We explore this further in ‘Investment scams: if it’s too good to be true, it probably is’

Scam #3 – The free pension review

Savers in this scam are lured in by the offer of a ‘free pension review’. The savers are then encouraged to invest in high risk, unregulated or even non-existent pension funds or investments.

Knowing who to trust

Always make sure you know who you are dealing with and never give out your personal information following a cold call.

The Financial Conduct Authority (FCA) has a Scamsmart warning list which gives the names of schemes that have been confirmed as scams.

Make sure you know who you are dealing with

 

If, on the other hand, you think you may have already fallen victim to a scam, you can report this to Action Fraud.

If you’re considering investing your pension pot and unsure what to do, talk to an adviser regulated by the FCA. You can check their register of firms online and find an Independent Financial Adviser through Unbiased.co.uk

Stay safe

You’ve worked hard to build your pension pot; don’t let another rob you of the fruits of your labour and the retirement you deserve. Be vigilant.

Join the conversation on twitter@standardlifeUK and Facebook

The information in this blog or any response to comments should not be regarded as financial advice – November 2016.