Pensions doctor: please don't touch your pension without reading this first


Write to Kate with your pension problem: pensionsdoctor@telegraph.co.uk. Columns are published twice a month on Tuesday mornings

Dear Kate,

I’ve been reading that fraudsters are exploiting pandemic fears and targeting pension savers. What should I look out for?

PS, Sussex

The coronavirus pandemic has created a perfect storm for fraud as scammers, aware of the squeeze on people’s personal finances look to take advantage.

Fraudsters tend to target those people closer to retirement, and older people more generally. And although pension scams have been around for a long time in one guise or another, the "pension freedoms" reforms – introduced in 2015, where over-55s can access their defined contribution pension savings as a lump sum – has exposed more people to risk.

Falling victim to a pension scam could mean that you lose all your pension savings in an instant. It’s more important than ever that you equip yourself to spot the warning signs of investment or pension scams, so that you don’t become another statistic.

Warning signs

Fraudsters use sophisticated and persuasive tactics. Often, they look genuine and it's very easy to be fooled, no-one is immune. Warning signs to look out for include:

  • Contact out of the blue
  • Pressure tactics, such as calling repeatedly, saying the offer is only available for a short time, or is only open to you and to keep it a secret
  • Downplaying the risks to your savings
  • Giving opportunities to invest in exotic unregulated investments, sometimes overseas
  • Promising high or guaranteed returns, which may seem tempting, but are too good to be true

Pension scams

After a campaign led by this newspaper, pensions cold calling, meaning contact from someone you’ve not dealt with before, by phone, text or email is now illegal in Britain. Companies are not allowed to contact you about your pension, unless you’ve specifically said you want to be called, or already have a plan with the provider. Companies breaking the law face enforcement action from the Information Commissioners’ Office, including fines up to £500,000.

Many cold calls originate from overseas, which can be difficult to track down. If you get a cold call about your pension, just put the phone down, don’t engage, and try to block the caller’s number if possible, or look at installing call blocker technology.

Fraudsters may try to tempt you in by offering free pension reviews. This is a trick to get you to share personal information.

Another tactic is to encourage you to transfer your pension to another scheme, promising guaranteed returns with little risk, possibly investing in exotic sounding but unregulated assets such as carbon credits, storage pods or overseas holiday accommodation.

Low risk, high return investments tend to be a myth. And no legitimate company will force you into making an immediate decision.

Fraudsters may offer to help you access or unlock your pension before age 55. I explain why this is a bad idea here.

One trend we’re seeing is fraudsters trying to take advantage of more people being at home due to the pandemic and surfing the internet for pensions information. An increasing number of fake websites are being set up that are purely designed to entice savers to access their pensions both before and after age 55. These websites can look convincing so make sure that any sites you visit for are secure and are the genuine websites of authorised providers.

As scams evolve, stay informed

The Financial Conduct Authority has a long-running campaign, called ScamSmart which is very useful for keeping up to date on what to look out for, as the methods used by scammers are constantly evolving.


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