A pension scam is usually easy to spot, it will be someone cold calling and claiming they can help you access your pension before 55. Investing in new hotels in exotic locations are usually fake but sound very appealing. Most pension scams will try and get you to transfer or withdraw your entire pension pot and transfer the money to them.
Pension scammers promise to convert pension funds into cash before retirement, or in some cases they may suggest people can take more than 25% of their pension pot as cash. Pension fraudsters promise to convert pension benefits into cash before age 55.
Criminals are believed to be fraudulently exploiting the pension liberation process in a number of ways. These include failing to advise members of the tax implications of receiving cash from their pension; failing to advise members of the full extent of fees to be paid in relation to any onward investment; falsely representing anticipated levels of returns when investments are either non – existent or incapable of providing such a return.
The scammers have a variety of tricks to catch you out. They may:
- claim that you can access your pension pot before age 55
- approach you out of the blue over the phone, via text message or in person door-to-door
- entice you with upfront cash
- offer a free ‘pension review’ or try to lure you in with so-called ‘one-off’ investment opportunities.
Check the facts before you make an irreversible decision. A lifetime’s savings can be lost in a moment.
The Pensions Regulator’s five steps to avoid becoming a victim of a pension scam:
- Cold called about your pension - just hang up!
- Check the credentials of the company and any advisers – who should be registered with the Financial Conduct Authority.
- Ask for a statement showing how your pension will be paid at retirement, and question who will look after your money until then.
- Speak to an adviser that is not associated with the deal you’ve been offered, for unbiased advice.
Never be rushed into agreeing to a pension transfer.