A major event like the COVID-19 crisis can lead to new types of scams, and we urge you to be vigilant for scams of all kinds that could appear in the coming months. These could be about insurance policies, pension transfers or high-return investment opportunities, including investments in crypto-assets.
Scammers are sophisticated, opportunistic and will try to get personal details or money from victims in many ways. They tend to target people who are feeling vulnerable, particularly in the current climate.
Could you spot a pension scam?
Pension scams can be hard to spot but their effects are devastating, with many people losing their life savings. While promising high returns and low risk, in reality, pension scams can leave you with nothing. In addition, you could then face a high tax bill from HM Revenue and Customs if you withdraw your savings before age 55.
Scams often involve unusual, high-risk investments like overseas property, renewable energy bonds, forestry, parking or storage units. If it sounds too good to be true, it probably is. Anyone can be a victim of a scam, regardless of how shrewd you think you are.
Things to watch out for:
- Unexpected contact – cold-calling about pensions is illegal, so it is best simply to hang up. Similarly, ignore unexpected emails and text messages.
- Time pressure – be wary of time-limited offers such as bonuses or discounts.
- Social proof – watch out for fake reviews.
- Unrealistic returns – anything that sounds too good to be true, probably is.
- False authority – claiming to be regulated or not needing to be. You can check for unregulated firms by using the Financial Conduct Authority’s (FCA) website.
- Flattery – being friendly with you to lull you into a false sense of security.
Further information and guidance
We would urge all members to avoid making hasty decisions about your pension or investments as a result of recent events.
If you are thinking about transferring your pension, please be VERY careful and check out your options thoroughly because once a transfer goes ahead, it is irreversible. When considering a transfer, make sure you consult an accredited independent financial adviser (IFA) who is specifically qualified to give advice about pensions: you can use the FCA’s website to check if they are a regulated IFA https://register.fca.org.uk
You can find out more from the government’s Money and Pensions Service (MaPS) at www.maps.org.uk
For more information about pension scams and how to avoid them, go to www.fca.org.uk/scamsmart