One in seven targeted by pension scams

Pension savers have been advised to watch out for scams after research revealed that 7.3 million people in the UK have experienced an attempted pension scam in the past 12 months.

This equates to around one in seven UK adults.

Almost four million people lost money to purchase scams over the same period.

The findings come from the LV= Wealth and Wellbeing Research Programme, a quarterly survey of 4,000 adults across the UK.

Hard to spot

Overall, the most common scam attempt in the past 12 months was 'phishing' (42%), when criminals use scam emails, text messages or phone calls to obtain bank details or other personal information.

Another 36% said they had experienced a trusted organisation scam attempt, where someone impersonates a trusted brand or service provider, and 24% had seen a refund scam, where contact was made from an impersonator about a supposed refund.

LV= noted that these figures represent individuals who recognised scam attempts, meaning the actual figures could be far higher.

Half of survey respondents agreed that pension scams and other types of fraud are becoming more sophisticated and difficult to spot.

"Avoiding falling prey to scams is becoming ever harder, with more people having a number of pension pots, so keeping track is increasingly difficult for consumers," said LV= chief executive David Hynam.

LV= said that pension savers can minimise the risk of falling victim to a scam by hanging up on cold calls, being wary of unsolicited approaches and calling organisations back on an official number.

What scams look like

Scammers can be articulate and financially knowledgeable, with credible-looking websites, testimonials and materials that are hard to distinguish from the real thing, explained Action Fraud, the UK's national reporting centre for fraud and cyber crime.

Scammers get in touch with people in a variety of ways. Usually, potential victims will receive a phone call, email or text message, or they may respond to an online ad. In some cases, scammers are introduced by a friend or family member who is unknowingly being scammed themself.

Free pension reviews, 'guaranteed' higher returns, or help to release cash from your pension if you're under 55 are among the offers designed to persuade you to transfer your pension pot (or to release funds from it). The money is then often invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, storage units, or simply stolen outright.

In order to gain your trust, scammers may claim that they are authorised by the Financial Conduct Authority (FCA) or that they don't have to be FCA authorised because they aren't providing the advice themselves. They may even claim to be acting on the behalf of the FCA or the government service Pension Wise.

High-pressure sales tactics are common, with scammers pressuring victims with 'time-limited' offers or even sending a courier to your door to wait while you sign documents. And with long-term investments, it can be several years before victims realise that something is wrong.

Protect yourself from scams

Action Fraud has set out four simple steps to protect yourself from pension scams:

• Step 1: reject unexpected offers
  • If you're contacted out of the blue about a pension opportunity, it's likely to be high risk or a scam.
  • If you get a cold call about your pension, the safest thing to do is to hang up -- it's illegal and probably a scam. Ignore any unsolicited offers via email or text.
  • Offers of free pension reviews are a red flag.
  • And don't be talked into something by someone you know. They could be getting scammed, so check everything yourself.

• Step 2: check who you're dealing with
  • Check the FCA Register to make sure that anyone offering you advice or other financial services is FCA authorised. Always use the contact details on the register, not the details the firm gives you.
  • Check to see if they are registered with Companies House and search the company name and the names of the directors online to see if others have posted any concerns.
  • You can also use the FCA Warning List to check the risks of a potential pension or investment opportunity.

• Step 3: don't be rushed or pressured
  • Take your time to make all the checks you need, and don't be rushed or pressured into making a decision. If it sounds too good to be true, it probably is.

• Step 4: get impartial information or advice
  • "You should seriously consider seeking financial guidance or advice before changing your pension arrangements," said Action Fraud. A financial adviser regulated by the FCA can help you make the best decision for your own personal circumstances.