Almost £50,000 a day was stolen as a result of pension scams in 2023, new data from the UK’s leading fraud prevention agency has shown.
According to Action Fraud, scammers walked away with £17.7m last year by tricking people out of their lifetime savings. The figure suggests there has been a significant uptick in the number of cases since the cost of living crisis.
The police-run cybercrime agency has urged savers to be vigilant and to treat unexpected communications or too-good-to-be-true investment opportunities with scepticism. It has singled out free pension reviews, pension transfers and offers to release money from pensions as some of the main ways criminals are separating people from their money.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Pensioners have been one of the groups that has been hit hardest by the cost of living crisis. While the state pension has risen considerably since 2021 thanks to the triple lock, the delayed way in which pensioners receive annual uplifts has created hardship among some retirees.
The government is currently consulting on how to ensure future generations save enough for retirement. It comes amid warnings that certain career decisions could greatly reduce the size of eventual pension pots.
Pension scams ‘on the up’, Action Fraud data suggests
Action Fraud data, which covers the entirety of 2023, revealed there were 559 reports of pension fraud last year. The typical amount stolen per victim was £46,959, with the overall £17.7m loss figure meaning an average of £48,632 was stolen each day.
April saw the highest number of fraud reports, accounting for 15% (£2.7m) of the total. The police unit said this was because people only tend to check their pensions around the new financial year, and therefore may have only noticed the fraud weeks or months after the crime had taken place.
Compared to the pre-cost of living crisis period, 2023’s tally appears to be a significant increase. Over the first five months of 2021 - the last time Action Fraud released pension scams data - £2,241,774 was stolen. Assuming this rate continued for the rest of that year, the total amount stolen would have been £5.4m (£6.5m when adjusted for inflation). Even when the rate of price hikes has been taken into account (roughly 20% over three years), the 2023 figure is almost triple that of 2021.
Commenting on the findings, acting director of Action Fraud Claire Webb said any amount of money taken by fraudsters could be “devastating”: She added: “Criminals will go to great lengths to trick anyone out of their money, in this case, it’s someone’s life savings at risk.
“Prevent a fraudster from taking away the hard-earned cash you’ve put towards your retirement by protecting your pension and investments, and doing the research on who you’re dealing with before making any big changes. Avoid pension opportunities offered out of the blue, like pension reviews or too good to be true investment opportunities. Don’t let anyone rush you into making big decisions and seek advice from an independent professional service or trusted family and friends.”
She was echoed by Steve Smart, joint executive director of enforcement and market oversight at the Financial Conduct Authority (FCA), who warned scammers could “target anyone”, regardless of the size of their pension pot. He said: “The best way to protect yourself is to know who you’re dealing with. Always check the FCA Register to make sure that anyone offering you pension advice or any other financial service is authorised by the FCA to perform the service they are providing for you, and that the details they are providing are the same as those on the Register.”
The Pensions Regulator said tackling pension fraud was a “top priority”. It urged more of the pensions industry to sign up to the Pledge to Combat Pension Scams campaign it runs, which aims to better protect savers.
How to avoid pension scams
According to Action Fraud experts, these tips could protect you from falling victim to pension scams:
- Look out for unexpected pensions communications. For example, unsolicited offers via email or text should be ignored, and you should hang up on cold calls.
- If you’ve seen an offer that’s making you consider your pension arrangements, get financial advice first.
- Only get advice from an advisor who’s registered with the FCA. Any advice coming from the company that’s contacted you ought to be discounted given it could form part of the scam.
- Never rush into a decision. Legitimate organisations will never pressure you into investing on the spot.
- Other fraudulent investment tactics to look out for include: time-limited offers, the downplaying of any risks to your cash, or returns that seem too good to be true.
The agency warned that transferring money out of your pension can come with big tax implications. You could end up paying up to 55% on a payment from your pension provider if they class it as ‘unauthorised’. This usually includes withdrawals that are made: before you turn 55 (there are some exceptions), payout amounts of more than £30,000, or regular payments into your account after you’ve died.
How does the Lifetime ISA work? Key LISA rules
AJ Bell: a fine British fintech going cheap
