What are the Different Types of Pension Scams?

Most investors are aware of the online email alerts related to pension reviews. There are many different types of pension scams - 

• One can be offered to get their pension before the age of 55. It is called the liberation scam. 

• The scammers may persuade the client to invest the pension money into higher profit schemes where most such schemes are based overseas, often difficult to trace.

• Some of the tricksters offer to review existing pensions. Such scams target young pensioners between the ages of 45 and 54. The aim is to get personal details from a victim or trick the investors into authorising to transfer funds into an unreliable account.

• Some fraudsters lure investors into buying a review scheme by giving free pension advice. The criminals aim to get your pension details and use the information to carry out a scam.

Most such scams are based on fake messages and emails. However, the offers can often be made by professional-looking websites that provide informative brochures and have a convincing online presence, mostly on social media. In addition, the previous clients post positive reviews and testimonials to back the schemes.

The phoney websites may appear real, but the criminals set up all these to grab new buyers. Recently, the FCA claimed that paid online advertising is one of the major sources of problems responsible for consumer harm through such tracks.

The inquiry report by the regulatory body called for tech firms to be held more responsible for these scams. The government is looking into the operations on online platforms to decide if their communication is subjected to financial promotion restrictions and, if so, if they are compliant or not.

The government regulatory agencies are working with the tech sector to find new approaches to lower financial scams. They plan to tackle the fraudulent adverts on search engines and social networking sites.

They may introduce tougher online advertising regulations and plan to strengthen the pension transfer regulation with an integrated first line of defence to protect pensioners.

The Pension Advisory Service has added a tool online to help identify a scam. 

• The pension account holders should be alerted if

• They receive text messages, emails, calls or a personal visit from a stranger regarding pension reviews. The government has banned cold calling since 2019, which means anyone legitimate will never make a cold call.

• If someone promises to get your funds released before the age of 55, in such conditions, releasing the pension money before time indicates you will have to pay 55 per cent tax on the money you withdraw.

• Promises to get you a higher rate of return. The current average rate of return is around 5 per cent after inflation, and anyone who claims to get you higher is making false claims.

How To Prevent Yourself From Being A Victim Of A Scam?

• Ignore unsolicited advice or offer of advice on your pension account money or review scheme.

• Do not make any changes to the previous pension plan in a hurry. Always make a prudent, knowledgeable decision, and do not be rushed or pressured into making any investment decision.

• Check the details of the individual or the firm who gives you advice and verify if they are qualified /eligible or not to give any such advice through the FCA register – which provides all the details of the legitimate, regulated firms.

• Always seek impartial advice from individual sources.

• Immediately, contact the pension provider and ask them to stop the fund transfer before the funds leave your account. It can be impossible to get the money back if you have already transferred funds. You can seek compensation from a government organisation, but it is provided only under certain specific conditions.  

If you suspect fraud, contact Action Fraud and report the scam to government agencies. The government offer compensation in case of negligent advice and if the scheme fails, but not as an outright scam.