It is fair to say that the Internet has changed our lives. Information is now to hand, with feedback and advice available 24/7. However, there is a downside to the Internet. Fraudsters are now able to “enter your front room” with pension scams in Nigeria and beyond now more commonplace.
We need to be careful, vigilant, and aware of the potential dangers. So, how do you spot a pension scam?
There are many common characteristics of pension scams, sometimes online, sometimes offline. We will now take a look at the many issues you need to be aware of if approached out of the blue by a “pension adviser.”
One of the main challenges is not getting “caught up in the moment” when impressive investment returns are being quoted as readily available.
We update all our guides regularly. If you are researching pension fraud and we haven't got an exact guide that helps you, keep coming back as we update daily.
This is a simple question, which prompts a very simple answer. Since April 2015, those with employer/personal pensions have seen a significant widening of their options. Pension funds now take in a greater array of different investments, and you can transfer to different administrators/trustees fairly easily.
Unfortunately, this has prompted a degree of confusion amongst pension fund holders, which the fraudsters have been very quick to exploit.
Unsolicited calls may offer “incredible investment returns” and ask you to transfer your pension fund to their administrators. Quick and simple, many people do get caught up in the moment.
However, if you receive an unsolicited call, making very attractive offers, take a step back and think things through.
No. Since January 2019, it is illegal for any party to cold call you regarding pensions. So, if you do receive an unsolicited call regarding your pension assets, this should be the first red flag. No reputable financial adviser would knowingly break the law, so this prompts the question, who is calling you and why?
You will often find that those contacting you without permission are very vague when you ask for contact details. They may suggest their phone line does not accept incoming calls, so how would you contact them if needed?
This is an additional red flag and one which should open your eyes to a potential scam.
No. At this moment in time, the minimum age at which you can access any of your pension funds is 55. So, if you receive an unsolicited call, or perhaps you have responded to an advert on the Internet, offering early access to your funds, this is not possible.
The only way in which you could possibly access funds prior to 55 years of age is due to medical issues. In this instance, you would contact your pension fund trustees and advise them of your situation.
Pension liberation is a term that, unfortunately, seems to give the scammers/fraudsters an air of respectability. It is simply a means by which to gain access to your pension funds prior to your 55th birthday.
If you were to transfer your pension fund to an unregulated third-party/unregulated investment, then your protection simply disappears. The likelihood is that your pension fund would also disappear. All very liberating for the scammers!
A pension loan is another term for pension liberation with exactly the same consequences. At the moment, with the economy struggling and unemployment set to increase, it is understandable that more and more pension holders are seeking access to their funds early.
Unfortunately, until the UK government changes the rules, this is just not possible, with the exception of serious medical conditions.
No. In the event that you were to transfer your pension fund to a fraudulent third party prior to your 55th birthday, at best, you would be hit with an HMRC penalty of between 55% and 70% of the fund value. This type of penalty would decimate the value of any pension fund.
However, imagine the situation; you transfer your pension fund to the fraudsters, who then proceed to steal your assets. Next, you get a call from HMRC informing you of your unauthorized payment fine. You could find yourself in serious financial trouble!
First of all, if you receive an unsolicited call, simply ignore it. They may also try to contact you via SMS, email, or even social media. Indeed, some scammers have been known to knock on the doors of victims - they have no shame, and many of them are “expert” salespeople.
Next, you should look at the FCA register to see whether the companies are regulated to provide financial advice in the UK. There is also an FCA warning list, which is also very helpful. Many of us use the Internet for very trivial things; now is the time to use it for serious financial issues.
If you are tempted to transfer part, or all, of your pension fund to a third party who contacted you directly, stop, think and seek advice. Even if everything seems legitimate, the promise of eye-catching returns should set alarm bells ringing.
If you have a financial adviser, seek their advice on your pension fund; otherwise, contact your pension fund trustees who may be able to assist.
The chances are that the scammers/fraudsters who targeted your pension scheme will be here today, gone tomorrow. Very rarely are they even based in the UK, let alone regulated. As a consequence, you have little if no protection once the funds have been transferred, as many people have found out to their cost.
So, tread carefully when it comes to unsolicited calls. If investment returns appear too good to be true, then they probably are too good to be true. If you are still intent on transferring to a third party, please take advice.
The Internet has been a game-changer for individuals and businesses. The amount of information at the fingertips of Internet surfers is mind-blowing. However, the Internet has offered a virtual door through which the fraudsters can step into your front room.
Many of us also have a social media footprint, which can often give away too much about our life and what we are up to. Be careful, be vigilant, and above all, don’t rush in.
Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for a mis-sold pension and they can do the same for you.
Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.
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