Pension scams — don't get stung!
Scammers can be articulate and financially knowledgeable, with credible websites, testimonials and materials that are hard to distinguish from the real thing. Scammers design attractive offers to persuade you, particularly if you’re a deferred member, to transfer your pension pot to them or to release funds from it. It’s then invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, and storage units, or simply stolen outright!
You'll have a lot on your mind at the moment as you try to keep your loved ones – and yourself – safe from the effects of the Coronavirus. You may be self-isolating or looking after a family member who is doing so, or you may just be working from home to do your bit to help slow down the spread of the virus.
Whatever precautions you're taking to stay safe, don't forget to keep your pension safe too. Scammers won't hesitate to take advantage of this situation to try and catch you off guard, so stay alert to any unsolicited approaches.
Warning signs of a pension scam include:
- You’ll be contacted out of the blue.
- Guarantee of very high or guaranteed returns on your pension savings.
- You may be offered a free pension review.
- Help to access your pension before the age of 55, without any mention of HMRC and the tax implications.
- You may also be pressured to act quickly.
What is a pension scam?
A pension scam can all lead to you losing some or all your pension savings. A fraudster can contact you by phone, text message or email. Scammers try and persuade pension savers to transfer their entire pension savings, or release funds from it, for them to invest. If someone contacts you out of the blue, offering a no-obligation or free review, be very aware.
Cold calling is now illegal, so you should not be contacted by anyone about your pension – unless you’ve asked them to. If you are, you should always check that they are on the FCA register. You can find out more about pension scams on The Pensions Regulator’s website.
Think before you act
Make sure your pension is safe by following these simple steps:
Don't be rushed or pressured into making any decisions
Find out if the company you're dealing with is registered by searching fca.org.uk/register. If it’s not listed then report it to the FCA at fca.org.uk or phone 0800 111 6768.
Report to Action Fraud at www.actionfraud.police.uk or call 0300 123 2040.
Speak to a financial adviser – find one near you at unbiased.co.uk
Find out more on the FCA’s dedicated section about staying safe at fca.org.uk/scamsmart
If you’re in the middle of a transfer and worried, please contact Mercer immediately and get in touch with the Pensions Advisory Service (TPAS) at moneyhelper.org.uk
Case study: Sally's story
From the start of the Coronavirus outbreak, Sally decided to isolate herself at home with her husband, Jack. Jack's heart condition meant Sally was really worried about passing the virus to him. She talked to her manager, who agreed that Sally could work from home.
Sally had so much on her mind – using new systems so she could work remotely, organising online food shops, cancelling plans to see friends – all to make sure that she and Jack were kept healthy, safe and as isolated as possible.
Because of this, Sally wasn't as cautious as she would normally be when she received a text from an unknown number. It said that the Government was allowing people to access their pensions early for a limited time to free up cash to boost the economy once the pandemic was over.
The text looked convincing and so was the website that the link took her to on her smartphone. Sally was tempted to find out more – after all, she and Jack would need a holiday once everyone could travel again. She mentioned it to Jack, who reminded her to check that the company was registered with the Financial Conduct Authority (FCA) at fca.org.uk/register
It wasn't, so Sally reported the company to the FCA and blocked their number.