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22 years’ savings gone in a day – scams warning

22 years’ savings gone in a day – scams warning

Penny Kunzig, MLRO
Picture of the author – Penny Kunzig, Partner, Money Laundering Reporting Officer

Penny Kunzig, Partner, Money Laundering Reporting Officer

Victims of pensions saving scams can lose the equivalent of 22 years’ savings in 24 hours. And education is no protection, experts have warned.

The warning comes after new research shows how being too trusting can end retirement dreams when individuals are persuaded to make quick decisions by scammers. The study, by the industry regulator, the Financial Conduct Authority (FCA), found that nearly two-thirds of people would believe unsolicited pension advice offered to them by a stranger. In 2018 the average amount lost by victims was £82,000, which could represent 22 years of pension savings for an average wage earner.

Vulnerable savers

More than half of people planning their retirement dream of travelling abroad. With interest rates so low they are vulnerable to promises of faster investment growth to help fund the trip.

Overconfidence often causes savers to miss the signs of a scam. 63% of people surveyed said they are confident about making a decision about their pension. The higher educated, those with a university degree, are 40% more likely to accept a free review from a company they had not heard of before. They are also more likely to take up the offer to access their pension pot early.

Scamsmart relaunched

The FCA is so concerned about the level and sophistication of investment crime that it has relaunched its ScamSmart campaign to share important advice. Like many other investment firms, James Hambro & Partners has supported the Scamsmart campaign since it started. We are determined to protect clients and to help them protect themselves.

If you become aware that your emails have been compromised it is important that you notify all your email and financial services providers as soon as possible.

Pension fraud can be devastating. It can leave victims with limited retirement income and little or no opportunity to build their savings back up. The FCA provides the guidance below on how to recognise and avoid pension scams.

How pension scams work

Scammers usually contact people out of the blue via phone, email or text, or even advertise online. They design attractive offers to persuade you to transfer your pension pot to them (or to release funds from it). It is often then:

  • invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, storage units;
  • invested in more conventional products, but within an unnecessarily complex structure which hides multiple fees and high charges; or
  • simply stolen outright

The warning signs

Scam offers often include:

  • Free pension reviews
  • Promises of higher returns on your pension savings
  • Help to release cash from your pension, even though you’re under 55 (an offer to release funds before age 55 is highly likely to be a scam)
  • High-pressure sales tactics – scammers will often try to pressure you with ‘time limited offers’
  • Unusual investments – these tend to be unregulated and high risk, and may be difficult to sell if you need access to your money
  • Complicated structures usually it isn’t clear where your money will end up
  • Long-term pension investments – it could be several years before you even realise something is wrong

Four simple Scamsmart steps to protect yourself from pension scams 

  1. Reject unexpected pension offers – whether through the post, online adverts, via social media or unsolicited phone calls
  2. Double check who you’re dealing with on the FCA Register before changing your pension
  3. Don’t be rushed or pressured into making a decision
  4. Get impartial information or advice

If you invest with an unauthorised firm, you will have no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.

If you suspect a scam you should report it to Action Fraud on 0300 123 2040 or go to the Action Fraud web site.

The simplest advice is the most obvious: if it sounds too good to be true it probably is.

Penny Kunzig

Posted on 21 November 2019


Opinions and views expressed are personal and subject to change. No representation or warranty, express or implied, is made of given by or on behalf of the Firm or its partners or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document, and no responsibility or liability is accepted for any such information or opinions.