How to fight the fraudsters coming for your pension pot

Investment and pension scams have proliferated during lockdown. Here’s how to protect yourself.

Financial fraud has soared this year, with pension and investment scams especially rife. Since 2017 “almost £31m has been lost to pension scams,” reports The Times. Figures from Action Fraud show that it doesn’t matter what size your pension is, criminals will try to steal it. “Scammers targeted pensions worth as little as £1,000.”

Pension scams have many names. You may be told it is a pension loan, early pension-release, pension selling, cashing in your pension, or pension liberation. “These are all different names for essentially the same thing – an agreement to transfer your pension savings to something that allows you to access your funds before the age of 55,” says Which. Tapping your pension before that age is only legal under very limited circumstances. Your money is then invested in high-risk assets such as overseas property or renewable-energy bonds, with the scammers taking a hefty commission – or they simply steal it outright.

It usually starts with a “free pension review” or a lucrative investment tip that you need to act fast on. The simplest way to avoid becoming a victim is to reject their offer or hang up the phone. If you do want to review your pension go to an independent financial adviser (IFA) registered with the Financial Conduct Authority (FCA). If in doubt call the Pensions Advisory Service on 0300 123 1047.

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With the Bank of England’s base rate at just 0.1% there has also been a surge in investment scams. This is where criminals target you with promises of ways to earn a better return on your savings. “Between June and July… reported investment scams leapt by 49%,” reports Matthew Vincent in the Financial Times. The figures from Barclays are the highest the bank has ever seen. Criminals took advantage of lockdown to target people worried about their finances. “Fraudsters have undoubtedly taken advantage of the nation’s uncertainty during the pandemic.” Victims of investment scams lose an average £29,000, according to the FCA.

Protect yourself from investment scams by rejecting cold calls and ignoring unexpected offers you receive by email or text. If a deal comes with time pressure – promises of a discount if you act fast – alarm bells should start to ring.

Be on your guard if a deal sounds too good to be true. If the returns are far better than anything you could get elsewhere, it is probably dodgy. But some scammers have got wise to this and now offer realistic returns, so don’t assume anything is genuine.

Do your research before you invest. Check the Financial Services Register to see if they are registered with and authorised by the FCA. Ensure that the contact details you have been given match the details on the register. You can call the FCA’s consumer helpline to check a firm or individual on 0800 111 6768. If you think you have been the victim of a scam, contact Action Fraud on 0300 123 2040.

Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings and credit cards to pensions, property and pet insurance. 

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping among many other titles both online and offline.