Pension scheme scams: how to prevent employees losing savings
In July, Action Fraud reported that victims of coronavirus-related scams had lost over £11million1, with it previously stating2 that pension scams had been among the most common type of fraud during the crisis. Victims of pension scams can be left approaching retirement with a significantly reduced income and in some cases, entire life savings can be lost.
To help pension scheme members avoid losing their pension to scams and fraudsters, we have highlighted the common mistakes individuals make when falling for a scam:
- “They looked so professional” -Scams look and sound legitimate, which is why people are hoodwinked. They often have very professional looking websites and literature. Whatever members are planning to do with their pension money, they should firstly check that the company is registered with the Financial Conduct Authority (FCA).
- “It was a once in a lifetime opportunity” -If an investment offers the opportunity of a lifetime, members should be very suspicious. If it seems too good to be true, it probably is.
- “They seemed so friendly and knew so much about me” -The people that run pension scams are clever and may have been able to get hold of an individual’s personal details. Members should be aware to not let their knowledge and friendliness catch them off guard.
- “If I didn’t decide quickly the opportunity would be lost” - Genuine advisers will never rush individuals to make a decision. Anything that talks about limited time offers is likely to be a scam. Always check with the FCA.
- “They said they could help me to access my pension early” -Pensions can normally only be accessed after the age of 55, unless in cases of seriously ill health. In normal circumstances, if someone promises to release a pension early they are lying and it is a scam. Members need to make sure they know the facts to avoid the fraudsters.
- “I didn’t know how to check them out” – Members need to know that if they are unsure they should always contact their employer if it relates to their workplace pension, or The Pensions Advisory Service (TPAS) or Pension Wise for any other kind of pension.
- “They kept contacting me and eventually I just gave in” -Scammers will use technology and try to contact individuals through various means such as social media, texts, telephone calls and emails. If members are in doubt, they should ignore it and hang up the phone or delete the message. Phone companies should be able to help by blocking any offending numbers and email providers can help to block emails from specific senders. Individuals should be aware of what they share through social media and check that their privacy settings are as secure as possible.
- “I didn’t report the scam straight away” -If members think that they are being scammed, they must contact TPAS immediately. Not only may they be able to help them, but they will be able to help others from falling for the same scam.
It is absolutely crucial that employers and Trustees put in place robust processes to support members. This now needs to be about striving for good member outcomes and not minimal compliance as many years of pension savings can be lost easily. The good news is that many employers and Trustees are rising to the challenge and taking on the Pension Regulators guidance to “….step up and protect savers using every possible means…”
Visit the FCA’s ScamSmart website to find out more http://scamsmart.fca.org.uk/.
The author is Jonathan Watts-Lay, Director, WEALTH at work.
This article is provided by Wealth at Work. WEALTH at work.
References
1. https://www.actionfraud.police.uk/covid19
In partnership with WEALTH at work
WEALTH at work is a leading financial wellbeing and retirement specialist - helping those in the workplace to improve their financial future.
