Recent data from Action Fraud showed that 991 cases of pension fraud have been reported since the launch of pension freedoms, involving losses of more than £22.687m.
Criminals are taking advantage of retirees who they know can now access their savings in new ways, with offers to unlock or transfer funds.
In a survey conducted by Prudential of 1,000 people aged 55+, 9% had been approached about their pension funds by people they now believe to be scammers. Forty-seven per cent said the approach involved offers to unlock pension funds or access money early, and 44% said they involved transferring pensions.
Action Fraud state that pension fraudsters promise to convert pension benefits into cash before age 55, or in some cases may suggest you can take more than 25% of your pot as tax-free cash.
They warn that you should be very wary of firms that approach you out of the blue over the phone, via text message or in person door-to-door.
Unsolicited phone calls regarding your pension are very often scams – they may claim to be Pension Wise or another government-backed body, however these organisations would never phone or text to offer a pension review.
Be sure to check the credentials of a company and any advisers, they should be registered with the Financial Conduct Authority (FCA). If you deal with someone who is not regulated, you may not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.
The FCA provide a list of firms they have identified as unauthorised, including ‘clone firms’, which are fraudsters who claim to represent authorised firms.
Check all of the facts before making any decision regarding your pension and never be rushed into agreeing to a pension transfer, as some scammers may try and pressure you with ‘time limited’ offers.
If you’re in any doubt, you can seek independent advice from an authorised professional to help ensure that you don’t get caught out.