How to avoid pension scams
The new pensions freedom rules have attracted the attention of scammers. Piper Terrett explains what you need to watch out for.
Savers may be celebrating the new pensions freedom rules that give them more control over their money and easier access to their pots, but it seems that fraudsters are already taking full advantage too. According to the City of London Police, £4.7m of UK pension money was "lost to pension liberation fraud" in May a jump of 235% on the £1.4m stolen in April, notes FT Money.
The scam artists are thought to be deliberately targeting the over-55s. That's the age at which you can now access your pension pot and cash in the whole thing, should you so desire (though given the tax you're likely to have to pay, it's not a sensible option for most).
There's enough concern about it for a "multi-agency task force" (ie, the government, regulators, police and anyone else involved in this area) to have issued yet another warning to savers to be vigilant.
So what should you watch out for? Anyone who calls you out of the blue should be treated with suspicion.Text message scams and offers of a "free pension review", or hints of legal loopholes that can enable you to access your money early, should be ignored.
Add to that promises of one-off investment opportunities that tend to involve exotic assets, such as wine, overseas property, or various "green" schemes. Other fraudsters may claim they can help you trace lost pensions. This service is available free from the government.
Typically scammers pressurise people to transfer their money quickly. In one case reported by the FT, a woman was bombarded with calls and multiple visits until she released her money. If anyone wants you or your loved ones to make a financial decision quickly, this should set off alarm bells. So put the phone down on cold callers.
Don't be swayed by glossy brochures or slick-looking websites anyone can use a colour printer or set up a website these days. Never discuss your finances with strangers on the doorstep or on the phone.
Before taking financial advice, check the individual is registered with the Financial Conduct Authority (FCA). Known scams are also listed on the site. And remember the golden rule: if it sounds too good to be true, then it almost certainly is.