Kristen Zanoni  |  August 27, 2020

Category: Legal News

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A worried older couple holds paperwork and a calculator while looking into the camera - pension scams

British pension holders have lost millions due to scams since 2017.

Pension scams have caused the loss of an estimated £31 million, but the definite number could be higher, Reuters reported. Underreporting of the pension scams is likely because many victims do not know they have been scammed, nor do they know the exact figure they have in their pensions before or after they have been scammed.

Reuters reported that pension scams range in loss from less than £1,000 to £500,000, according to Action Fraud. The average victims of pension scams are men in their 50s.

Five years ago, pension rules were eased, and the relaxed rules created an environment for potential fraud.

The pension scam problem may have gotten worse during the pandemic. Last month, lawmakers in the U.K. initiated an investigation into pension scams.

The FCA says £30,857,329 has been scammed from unsuspecting victims, according to fraud complaints registered with Action Fraud.

According to the FCA, research into pension scams shows that retirement-aged football fans are particularly vulnerable. Only 43% know how much their pensions hold, and 45% do not know how to determine whether a scheme regarding their pension is authentic. 

Pension scams are created to be alluring. The offers are persuasive in nature and lure victims to transfer money in their pension to criminals. The pension scams often use limited-time deadlines to urge victims to transfer money quickly.

“During these uncertain times, it is more important than ever to defend your lifetime savings from scammers,” the FCA’s Mark Steward said. “Fraudsters will seek out every opportunity to exploit innocent people, no matter how much or how little you have saved. You can check the status of a firm before changing your pension by visiting the FCA register, and get advice from an FCA authorised firm before making any changes to your pension. And give scammers the boot!”

A glass jar with a "pension" label is knocked over, with coins spilling out - pension scamsFinancial regulators are urging pension savers to look into schemes and make sure they are legitimate. Consumers should take their time to make decisions regarding their pensions.

During the coronavirus pandemic, people are getting wake-up calls to review their savings and hope to make profits in interest. The pandemic may have upped the ante for pension scams by preying on financial vulnerability. 

Pension scams commonly start with a call, text, social media message or email, the BBC reported.

The scams usually offer a free review of the person’s pension or they use persuasive tactics like high returns on the savings. Instead of a smart money move, the money is transferred and stolen.

Pension scams may look like high-profit investments into green energy or another industry, and extra pressure is used to urge victims to make quick decisions.

These “investments” are just a way to funnel money from the victim to the scammers.

Last year, the U.K. government banned these pension calls and placed hefty fines on the rule, the BBC reported. However, many scammers do not follow the ban and continue to use these tactics.

One pension scam victim was 57-year-old Viv, according to the BBC.

“It was a call from a man who seemed very decent and respectable,” she said. “He seemed knowledgeable and trustworthy. I didn’t know much about how pension transfers worked then and he sounded convincing.”

Viv fell victim to the pension scam and lost £200,000.

There are a number of ways to protect yourself from pension scams.

One way is to use ScamSmart. ScamSmart is an easy way to test your knowledge of pension scams. Pension holders can use the ScamSmart website to take a quiz.

After brushing up your knowledge on ScamSmart, check out these other pieces of advice financial regulators say you should know in order to avoid pension scams:

  1.   Take the time to make decisions about your pension. Do not be pressured or rushed. 
  2.   Do not accept pension offers online or over the phone. 
  3.   Make sure you are working with a reputable firm before making decisions. Use the Financial Services Register to be sure or contact the FCA helpline at 0800 111 6768 to confirm the business is authentic.
  4.   Get unbiased pension advice. 

 

Have you been approached by an illegitimate pension services person? Have you spotted pension scam attempts? Let us know in the comments.

Check back daily for the most recent U.K. class action lawsuit and consumer protection news.

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