The five most common scams that cost pensioners millions 

The success of con artists is in their sophistication and ability to adapt to attempts to catch them.  
The success of con artists is in their sophistication and ability to adapt to attempts to catch them Credit: john lund

Scammers are getting their hands on increasing amounts of your pension money, with the figure lost to fraudsters more than doubling last year to £23m – or £91,000 per victim.

Once this money is lost, it is very unlikely you will see any of it again.

City watchdog the Financial Conduct Authority (FCA) and the Pension Regulator want you to do more to safeguard your retirement savings. Mark Steward, head of enforcement at the FCA, said spotting scammers should be easy.

He told Telegraph Money: “The ways people can protect themselves are very common-sensical. It is so easy to avoid some of these red flags, they really do flutter in the breeze.”

But the success of con artists is in their sophistication and ability to adapt in the face of attempts to catch them.

We looked at the top five tactics fraudsters use to separate you from your hard-earned cash to help you spot the clever ways they try to trick you.

1. Unexpected contact about your pension via phone, post or email

This is by far the most common ploy used by fraudsters. Getting hold of your contact details and pretending to be a legitimate firm is easier than you might think. Some methods are illegal, such as buying your data from company insiders, but often people themselves are the source of the information we give away for free.

According to The Pension Advisory Service, savers are increasingly reporting being targeted using information they have placed in the public domain.

Professional connections site Linkedin offers rich pickings for scammers because of the level of detail it gives about an individual’s employment history. Fraudsters may target employees from a certain company if they know the firm’s pension scheme is in trouble.

With the amount of information already available they can easily play the role of someone tasked by your employer to discuss your pension options, usually via a "free pensions review".

Anyone contacting you out of the blue offering you a free review of your retirement savings should be a huge warning sign not to deal with them. Stop them in their tracks – do not give out personal details or financial information.

Good, regulated pension advice has a price – for a pension transfer this is around £2,500 – and is worth paying for.

2. Promises of guaranteed high returns and downplaying the risks

It’s an oldie but a goodie – if it sounds too good to be true, in the vast majority of cases, it will be.

"Guaranteed" returns are rare enough, but guaranteed high returns are the stuff of myth, doubly so if they are promised on the basis your money will not be at risk.

Investments that offer high returns are compensating you for the risk you are taking with your money: higher returns mean higher risks. If someone comes knocking saying they can turn this on its head, they are lying.

You may be happy to accept more risk in exchange for the possibility of making increased returns. But any sound investment offering this will be upfront about the fact you could lose some, or all, of your money. Schemes promising you can’t lose mean you almost certainly will.

3. Offering unusual or overseas investments that aren’t regulated by the FCA

Bamboo, binary options, carbon credits, cyrptocurrency, diamonds, overseas property or land, parking, graphene... the list of “opportunities” to avoid on the FCA’s Scamsmart website includes all manner of weird and (not so) wonderful assets people have been encouraged to back with their pension.

But do you really want to be investing the money you plan to rely on in retirement in something as speculative as the price of bamboo? Unless you are an actual panda, the answer should be "no".

4. Putting you under pressure to make a quick decision

Time pressure is a classic tactic used by people trying to separate you from your money before you have a chance to think twice about what is being offered. Highstreet and online retailers do it all the time: “Flash sale, must end soon”, “Huge discounts, Bank Holiday weekend only”, “Just one room left at this hotel, book now”.

But while an impulse buy in a flash sale may mean you end up with a few more pairs of trousers you don’t really need, buying an investment under pressure could mean losing your entire life savings.

Fraudsters play on what the kids call FOMO (fear of missing out). If an investment salesman says you must hand over your money this instant to benefit from some limited time offer, for example by sending a courier round with paperwork to sign, you can bet your bottom dollar they are trying to scam you.

5. Claiming they can unlock money from your pension before age 55 

Searching "access to pension before 55" brings up 23 million results on Google. But the only one you should click on is the government's Pension Wise information site, which says in big, bold letters:

“If someone contacts you unexpectedly and says they can help you access your pot before the age of 55 it’s likely to be a pension scam. You could lose your money and face a tax charge of up to 55pc of the amount taken out or transferred plus further charges from your provider.”

Offered referred to as "pension liberation" or "pension unlocking", fraudsters will try to tell you about a “little known loophole” that means you can access your retirement savings before the mandated minimum age of 55 without paying the 55pc penalty. This. Is. A. Lie. There are no such loopholes.

The only way you may be able to withdraw money from your pension pot before you’re 55 is if you can’t work because you’re seriously ill, for example, or if you are expected to live for less than a year. In that case speak to your pension provider about the rules of your pension – it’ll depend on their definition of "ill health".

laura.miller@telegraph.co.uk

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