Warnings over con artists attempting to take advantage of “pension freedoms” are being repeated in light of evidence that consumers risk losing all their retirement savings.
With people over 55 now allowed to unlock all their retirement money in one go, there have been widespread fears that fraudsters would try to use the new legislation in a bid to con people out of their nest eggs. Six months after the new rules came into force, those fears seem well founded.
One pensions business, Phoenix Group, says it has identified 1,650 suspicious operators that it believes are involved in scams. Its research suggests that about two people in every five who have been contacted about a “pension review” have taken the offer seriously, even when such an offer has come from a fraudster. And when deciding where to invest their money, only half of those contacted are bothering to check with the Financial Conduct Authority or Companies House that the companies they are using are properly registered.
“Our analysis shows that fraud is still rife in the pension industry and fraudsters have evolved to take advantage of the new freedoms,” says Parminder Dhothar, of Phoenix Group.
“Consumers need greater education on the risks of fraud – especially those taking cash and reinvesting the funds, as it is more difficult for providers to prevent them from being victims.
“Many people are not aware of where to get advice to help them make the right investment decisions and, with only with only one in 10 people opting to speak to an independent financial adviser, it is even more important to raise awareness of the issue and ensure consumers are adequately protected.”
Tips to help thwart the fraudsters
- Don’t be pressured into making quick decisions. As well as not giving yourself the chance to think through your options properly, pressure-selling is often an indicator of fraudulent behaviour.
- How were you contacted? Is a badly-written text message really the way you’d expect an above-board pensions company to make contact with you?
- If you are asked to pay a fee up front, that is often a sign that you are dealing with a con artist.