As the rate of fraud continues to rise, savers are urged to avoid falling victim to these criminals. One way in which fraudsters operate is by duping people into pension scams – and the impact can be devastating. Many Britons can lose their life savings and once the money is gone, it’s almost impossible to get it back.
Express.co.uk spoke exclusively with Claire Trott at Handlesbanken about pension scams and how they work.
She explained that anyone can be the victim of a pension scam, no matter how financially savvy they think they are.
There are various tactics used by pension scammers designed to lure people in but It’s important that everyone is able to identify the warning signs if they’re about to fall victim to a pension scam.
Ms Trott continued: “Scammers may attempt to persuade pension savers to transfer their entire pension savings, or to release funds from it, by making attractive-sounding promises they have no intention of keeping.
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“Nowadays, some scammers entice victims to part with their money and invest it elsewhere, pledging that they get more than their stake back. The promise of guaranteed high returns sounds too good to be true and should be treated like it.
“Scammers may offer the opportunity to invest in something considered exotic, such as a portfolio of overseas properties, renewable energy projects, forestry or biofuels.
“Although these may sound exciting, they can often be too good to be true. Once funds leave this country, they are very difficult to monitor or get back, even if it’s a legitimate investment.”
If Britons are approached directly with this kind of offer, without any way of checking legitimacy, it’s suggested they “stay well clear”.
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Scammers will sometimes promise savers early access to their pension pot through loans or loopholes, Ms Trott said.
However, there are strict laws about the age at which pension savings can be accessed, how they can be paid and how they will be taxed.
Savers could lose all their money and face a high tax bill from HM Revenue and Customs (HMRC) if they withdraw their pension savings before the age of 55, up to 70 percent of the amount taken, “so it isn’t going to be worth doing”.
People should always be wary of anyone promising early access to a pension pot as the consequences can be devastating, and pensioners will be “left with nothing” she explained.
All pension savers should speak to an independent adviser before making a transfer, Ms Trott recommended.
She went on to discuss the actual warning signs that pensioners may want to look out for.
Cold calling about pensions is illegal and a likely sign of a scam.
Ms Trott continued: “Cold calling was banned for pensions recently so always remember that if you receive an unsolicited call about your pension then it is likely to be a scam.
“The callers won’t necessarily be asking clients to access their pensions and pass the funds to them directly but may be trying to encourage further engagement by visiting a website or agreeing to take some pensions advice from them.
“If a company does call, they should be reminded they are breaking the law and can face fines of up to £50,000.”
Callers offering free advice “can be very tempting”, but it can also mean that scammers get their hands on a lot of personal data and precise details of a pension scheme.
She added: “Scammers may ask for personal details over the phone in order to give free advice. Never give these out unless you can guarantee it’s your pension provider, and the caller can be validated.”
Other common signs of pension scams mentioned were phrases like pension liberation, loan, loophole, savings advance, and one-off investment.
Britons are urged to contact Action Fraud if they believe something is wrong.
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