30th June 2015
One in five over 50s may have been targeted by scammers looking to trick people out of their savings, a new survey reveals.
The YouGov study commissioned by Retirement Advantage found that 17% of over 50s and 20% of over 55s have been approached by a company offering to help them access their pension early, for instance through legal loopholes or a one-off investment opportunity.
The most common method of contact was by telephone (50%), followed by post (24%) and then online (23%).
Andrew Tully, pensions technical director at Retirement Advantage, says: “It is clear that there are already scammers preying on people who might like the idea of using the new pension freedoms to take large amounts of cash from their pension schemes. The scammers may be offering get rich quick schemes or even early access before age 55 to trick people out of their hard-earned savings. Retirees need to be on their guard: if an opportunity sounds too good to be true, it almost certainly is.
“It is vital that the Government and financial industry work together to ensure all practical measures possible are in place to protect people from these scams. We need to make people aware that there are fraudsters hoping to trick them out of their money. Hopefully Pension Wise will help educate people around the risks, but professional financial advice will be crucial to ensure people understand the options available to them and make the right decision for their personal circumstances. The Government also needs to make life difficult for the scammers, and punish those found guilty of preying on innocent victims.”
Here are five signs that should set off alarm bells:
1. 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.
2. 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.
3. Warnings that the deal is limited and you must act now. Choosing the right retirement income product is a big decision and shouldn’t be done quickly or under pressure.
4. 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.
5. 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.