Member Article

Be on your guard against pension scammers

Citizens Advice Darlington is calling for people to be on their guard against pension scams after a BBC documentary revealed that some companies are exploiting the new pension freedom rules.

The rules, introduced last year, allow those people aged 55 and over full access to their pension pots with the first 25 per cent tax free.

This week’s Panorama highlighted the fact that pension freedom fraud is coming into the public domain as scammers shift their tactics to offering free pension reviews. The programme makers unveiled certain sales traits used by cold callers to prise valuable pensions’ schemes, often occupational pensions, from the public.

Undercover footage showed one unregulated consultant giving advice and suggesting high risk investments.

The programme backed up the findings of a recent report from national Citizens Advice which stated that nine in ten people (88 per cent) miss common warning signs - such as unusually high investment returns, cold calling and offers of free financial advice - despite feeling confident they can spot fraudsters’ tricks.

The report also revealed a mismatch between people’s confidence in spotting a scam and their ability to do so. Three in four (76 per cent) said they are confident they can identify a pension scam but just 12 per cent were actually able to do so when a scam was presented to them.

Citizens Advice Darlington says scammers’ tactics are also moving towards free pension reviews and advice as a first step towards tricking people out of their pension pots.

Neeraj Sharma, chief executive of Citizens Advice Darlington, said: “Fraudsters are changing their tactics to rob people of a financially secure retirement. While scammers continue to use offers of unusually high returns and lucrative overseas investments as a way to fool victims, more people are being approached with free pension reviews or financial advice as a first step towards tricking them out of their hard earned pension savings.”

To help people avoid becoming victims of a pension scam, Citizens Advice Darlington has shared warning signs to watch out for:

Ignore any contact you receive out of the blue about your pension. This could be in person, online, on the phone or in the post.

Watch out for any promotion offering you more than 8% return on your pension investment. Be wary of any offer to access your pension before 55. Accessing your pension early can mean you are hit with a high tax bill of 55%, as well as losing any pension savings in a scam. Don’t feel pressured to make a decision about your pension straight away, instead take your time. Watch out for extravagant sounding investments based overseas. Check the Financial Conduct Authority (FCA) online register to make sure the company approaching you is legitimate. Anyone giving financial advice should be registered. If you are making an investment, check the FCA ScamSmart warning list for known investment scams. If you are transferring a pension, ask your current pension provider to check the HMRC registration of the new scheme to check it is legitimate. If you are over 50, Pension Wise guidance can equip you with the knowledge of what to look out for to avoid falling victim to scams.

As many as 10.9 million consumers have received unsolicited contact about their pension in the last year and the national Citizens Advice report reveals that people are particularly at risk of scams from phone calls, post and emails which come out of the blue.

Mr Sharma said: “You shouldn’t feel pressured to make a decision about your pension so take your time and make sure the offer is genuine. Before considering any kind of pension review or investment, you should check to make sure the company is legitimate. If you are worried that you may have been targeted by scammers Citizens Advice Darlington can help.

“If you are over 50, Pension Wise guidance can help you understand what warning signs to look out for and avoid falling victim to a pension scam. Citizens Advice Darlington can help you book a Pension Wise appointment across Darlington, Teesside and County Durham.”

Nearly a quarter of a million people have taken advantage of the new freedom to take control of their pensions.

Citizens Advice delivers face to face sessions of the Government’s Pension Wise service. You can book a telephone or face to face Pension Wise appointment by phoning 0800 138 8292.

This was posted in Bdaily's Members' News section by Citizens Advice Darlington .