However smart we think we are, we should all beware of financial scams and frauds. This is particularly true of pension scams.
Professional Adviser recently published the results of a study where a consumer guidance website asked savers considering transferring their pensions to alternative providers to answer some basic questions about the proposed transaction. The result revealed that 25% of these transfers raised red flags that could indicate a fraud.
Fewer than a third of pension fraud cases referred to police
Those who fall victim to a scam often have little chance of getting their money back. According to MoneyWeek, of more than 4,000 pension fraud cases reported to Action Fraud over the past eight years, less than a third have even been passed on to the police for further investigation.
Pension transfer fraud
While there are a variety of different financial frauds to watch for, pension transfer fraud is of particular concern. Throughout your lifetime, it’s possible to accrue a great deal of money in your pension pot. For fraudsters, this makes pension transfer scams hugely profitable.
If you are considering a pension transfer, make sure you speak to reputable advisers and beware of anyone promising unrealistic returns on unusual investments. Also, be vigilant of anybody who tells you they've found legal or tax loopholes that you could benefit from.
While this sounds alarming, one of the most important things to remember is that it's almost impossible for pension scammers to access your savings without some kind of active involvement from you.
So, one of the best ways to protect yourself is to be aware of warning signs that could mean you’re being targeted by fraudsters.
The key to protecting your money is knowing how to spot a scam
Here are three key giveaway signs to watch out for.
1. Be on guard whenever you receive unsolicited calls
The UK government banned pension cold-calling in 2019. In a bid to tackle the growing problems with fake insurance products and cryptocurrency schemes, there are plans to expand this ban to all financial products.
In the meantime, if you receive an unsolicited call from someone you don’t know, hang up.
2. Do you feel rushed into making a decision?
If someone is forcing you to make a quick decision or you feel in anyway pressurised or encouraged to transfer your pension quickly, cease communication immediately. Never worry about being rude or abrupt. A professional pension adviser will never rush you into making a decision.
3. If it sounds too good to be true, it probably is
Beware adverts and advisers promising unrealistic rates of return on unusual investments, as well as those that claim to have found legal or tax loopholes that could help you.
Fraudsters often make promises that may include prizes, free gifts, or special early trials. They may tell you that you’ll be able to access your pension early or boast investments offering sky-high returns with little to no risk.
When promises and accolades sound tempting, chances are they’re being fabricated to lure you into a trap.
If you’re unsure, hang up and call someone you trust
Should you feel even the slightest concern that you’ve been targeted, call your pension provider on a number you trust.
You should always report any knowledge or suspicions of pension scams. If you believe a scam has already happened, you suspect that a pension scam could be taking place, or you’re suspicious that people are involved in fraudulent activity, report it.
Making an official report will allow authorities to investigate and prosecute scammers. Plus, it can help law and policy makers geta clearer picture of the effect that scams have on pensions.
If you’re concerned that you may have been the target of fraud, we’re here to provide information and lend support. Read more about how you can protect yourself from pension scammers on our website.
Seek independent financial advice
Anyone considering a pension transfer should always seek independent financial advice before making a final decision.
Saving for retirement throughout your working life could make your pension one of the most valuable assets you own. So, make sure you protect it by doing as much research into the advantages and disadvantages of a pension transfer as possible before signing on the dotted line.
We are always happy to chat about your situation and answer any questions you may have about pension transfers.
Get in touch
If you’ve been approached and are worried it may be a scam or you’d like to talk to us about safely transferring your pension, please get in touch.
Email enquiries@alexanderpeter.com or give us a call on +44 1689 493455.
