Following the landmark pension freedoms of this past April, the new pension savings landscape is giving fraudsters ample room to target the vulnerable.
According to YouGov, as many as 1 in 5 over 55s have been targeted by scammers attempting to fleece them of their pension savings.
The new pension freedoms have been welcomed by most, but pensioners are being warned to steer clear of any offer or product that simply sounds too good to be true. Without the need to buy an annuity, the pension pots of pensioners up and down the land are available to be invested in a wide array of possible investments and products. Some investments will be sound and delivered from a reputable source, but remember to stay on your guard.
The Government’s official guidance service – Pension Wise – will never contact you out of the blue and they have only one official website: www.pensionwise.gov.uk
Pension scammers may imply or claim that they are directly endorsed by the Pension Wise service by including the words ‘wise’, ‘guidance guarantee’ or ‘pension guidance’ in their name. To ensure that you are not defrauded, check the firm on the Financial Conduct Authority register at www.fca.org.uk/register.
Equity release provider Retirement Advantage have issued 5 essential tips for avoiding the scammers:
- An offer to help you access your pension savings before age 55. It is only possible to do this in rare situations, for instance if you are very ill, so be careful and always check with your pension provider.
- A recommendation to take a large amount of money, or your whole pension pot, in a lump sum and invest it. There are significant tax implications if you take lots of your savings in one go, so check the tax position before you make any decisions.
- Warnings that the deal is limited and you must act now. Choosing the right retirement income product(s) is a big decision and shouldn’t be done quickly or under pressure.
- An encouragement not to get professional financial advice or talk to Pension Wise. An adviser would be able to explain the rules and tax implications of different options and help you make the best choices for your personal circumstances, so be very suspicious if this is discouraged.
- Contact by somebody who is not on the Financial Conduct Authority (FCA) Register. The Register is a public record of all the regulated firms and individuals in the financial services industry, including retirement income providers and investment companies.