The scale of the problem
In 2019 The Financial Conduct Authority and The Pensions Regulator released research showing that 42% of pension savers, (the equivalent of over 5 million people across the UK), could be at risk of falling for a scam. It estimated the average loss to be £82,000 per victim, which equates to around 22 years of pension savings.
The same research also found that the more highly educated a person, the more likely they are to fall for a pension scam, due to overconfidence. Those with a university degree were found to be 40% more likely to accept a free pension review from a company they did not know, and 21% were more likely to accept an offer of early access to their pension. Of those surveyed, 24% admitted to taking 24 hours or less to decide on a pension offer.
The reality is that anyone can fall victim to a pension scam, regardless of age or level of education. Scammers are increasingly sophisticated criminals and prey on savers simply seeking to make the most of their money in a confusing pensions world.
Scammers may choose to target specific consumer groups, placing them at a higher risk:
The more vulnerable in society and those who are lonely, with no one around to sense check their decisions
Those in cognitive decline
Older consumers with larger pension pots
In March 2020 Action Fraud, the UK’s national reporting centre for fraud and cybercrime, announced that coronavirus-related fraud reports had increased by 400%. The number of pension scams is expected to soar during the coronavirus (Covid-19) pandemic, as opportunistic scammers attempt to take advantage of the economic uncertainty.
In mid-April 2020 the National Cyber Security Centre revealed it had already taken down 2,000 online scams, including 200 phishing sites seeking personal information such as passwords or credit card details and over 800 advance-fee frauds, where a large sum of money is promised in return for a set-up payment.
Coronavirus-related scams are specially designed to exploit savers concerned about their job security or the financial markets, and those who are experiencing serious financial strain. Savers should be especially vigilant about transferring pensions and any high-return investment opportunities, including investments in cryptoassets, during this time.
The most common pension scams:
Where to find help and advice
The Financial Conduct Authority
The Financial Conduct Authority is responsible for ensuring financial markets are honest, fair and effective so that consumers get a fair deal. It does this by regulating the conduct of more than 59,000 businesses, and is also the prudential regulator for more than 18,000 of them.
The Financial Services Register is a public record that shows details of firms, individuals and other bodies that are, or have ever been, regulated. You can search the Register to find out if a firm or individual you are using, or plan to do business with, is approved. In addition, the Financial Conduct Authority also has a dedicated Scam Smart hub where you can find out more about common scams and ways to protect yourself.
Pension Wise is a free and impartial service set up by the government. It can help you if you’re aged 50 or over, have a workplace or personal pension, and want to make sense of your options. If you meet these criteria you can get specialist pension guidance in a one-on-one session lasting up to an hour. This can be over the phone or in person, near where you live.
The Pensions Advisory Service
The Pensions Advisory Service is a public body that provides free information and general guidance on pensions. Its website has hundreds of pages of useful content on everything from avoiding pension scams to understanding how pensions work. You can get in touch by post, or by speaking to a pensions adviser by phone or web chat.
Reporting a scam
If you suspect a scam, you can report it to the Financial Conduct Authority by phoning the Consumer Helpline on 0800 111 6768 or via the online reporting form. You can also call Action Fraud on 0300 123 2040. Pension cold calls should be reported to the Information Commissioner’s Office (ICO). You can report a potential phishing message to the National Cyber Security Centre using the Suspicious Email Reporting Service.
If you've already shared your bank account details with a suspected scammer, contact your bank immediately. If you've agreed to transfer your pension to a suspected scammer, contact your pension provider straight away.