Six common pension scams to avoid
Since the advent of pension freedoms, scammers have devised new ways to get hold of your savings
Pensions are being increasingly targeted by fraudsters, in the wake of the new rules allowing people greater access to their retirement savings.
The Pensions Advisory Services (Tpas) has warned that it is receiving an increasing number of calls from people who have been contacted by scam artists trying to part them from their pensions.
Since the new pension freedoms came into effect in April there has been a government drive to boost people's awareness of their pension and the options available to them. But smart scammers are using this marketing to their advantage.
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"Scammers are almost too bright for their own good," says Michelle Cracknell, the chief of Tpas in Citywire. "We have had imitations of TPAS. The scammers tie it to the Government initiative. People are reading in the papers that the Government is doing something and putting the two together. It's quite dangerous."
Common scams - and how to avoid them
There are many cons used by criminals to try and part people from their pension savings. These are the six most common, according to The Pensions Regulator:
1. You are contacted out of the blue, either by a cold call, text message, website pop-up or someone coming to your door, offering you a free pension review, unique investment opportunity or a legal loophole to boost your pension.
If you are receive an unsolicited contact don’t agree to anything there and then. Say you want to think about it. If the sales person then gets pushy, it's a good sign it is a scam. Get rid of them and do your research. A quick internet search or call to TPAS (0300 123 1047) will show you if the offer is legitimate or not.
2. You are pitched an investment with returns that are too good to be true. The Pension Regulator suggest you should be ware of anything offer more than an 8 per cent return.
Again, take the time to research the offer or speak to an independent financial advisor to see if it is a genuine investment. Remember, if it sounds to good to be true it probably is.
3. Paperwork is delivered to your door requiring immediate signature. Be very wary. If something needs signing but you know nothing about it, don't sign. Tell them you want to read through it carefully first.
4. You are advised to put all of your pension money into a single investment. This is highly likely to be a scam as a financial advisor with your best interests in mind should be telling you to diversify your investments to minimise risk.
5. You are approached by someone saying you can access your pension before age 55. This is undoubtedly a scam that is likely to see you losing huge chunks of your pension. There are financial penalties if you try to access your pension early except in very extreme circumstances, such as terminal ill health.
6. You are advised to transfer to an investment overseas. Be very careful, this is likely to be a scam. Take the time to research the investment and speak to an independent financial advisor or Tpas before you do anything.
As long as pensions exist there will be criminals trying to get their hands on your savings. The police and regulators will never manage to eliminate these cons completely so be on your guard.
"Scammers can't all be stopped. It’s like a balloon, if you push it down in one area it will just pop up in another," says Cracknell.
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