Britons are being warned to be wary of fraudsters who are scamming people out of their life savings by offering a “free” pension review.
With scammers claiming to be authorised and tricking people into a false sense of security, the Financial Conduct Authority (FCA) has shared some key warning signs to look out for to avoid getting caught out.
In a statement on its website, the FCA said: “If you’re contacted unexpectedly and offered a free pension review, it’s likely to be a scam. Professional advice on pensions is not free.
“Most of the companies offering free pension reviews aren’t authorised, but many falsely claim they are. They may also claim that they don’t have to be authorised, as they aren’t providing the advice themselves.”
The regulatory body added that some scammers may even say they’re acting on behalf of the FCA or Moneyhelper.
The scammers aim to persuade people to move money from their pension into a high-risk scheme.
The pension pot is then invested in what could be deemed as unusual investments, such as overseas property, forestry, storage units, care homes, biofuels or businesses people may not be familiar with.
People may be promised guaranteed returns or cash from their pension to tempt them to take up these offers. Some of these investments are badly run, while others are “outright scams”.
As they’re promoted as long-term pension investments, the FCA noted: “It could be several years before you realise something is wrong.”
How to spot a pension review scam
To spot a pension scam, people should look out for the following red flags:
- A guaranteed better return on pension savings
- High-pressure sales tactics
- Unusual investments, which tend to be unregulated and high risk
- Complicated structures, so it isn’t clear where a person’s money will end up
- Several groups (some of which may be based overseas) all taking a fee, which means the total amount deducted from the pension is significant.
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