31st May 2016
With the number of scams doubling in the past six months pensions have become a honey pot for fraudsters as they attempt to persuade savers to part with their hard-earned pensions says Aegon’s head of pensions Kate Smith.
She says that scammers are now coaching savers on what to say when their pension provider might become suspicious.
She says: “Fraudsters are using different tactics to get hold of your pensions, often starting with a cold-call. Common tactics include offering to ‘liberate’ your pension by transferring it away from a genuine pension scheme to one that allows you to cash in your pension before age 55. Another common tactic is to move your pension overseas, commonly to Malta or Hong Kong, promising that doing so can double your money in ten years’ time.
“Scammers fail to mention that accessing your pension before age 55 breaks the tax laws risking a 55% tax penalty and that transferring your pension overseas when there is no intention to live abroad can also lead to a similar tax penalty. In the worst case scenario people risk losing all their pension savings and face paying a hefty tax bill, leaving them with nothing to live on in retirement.
“The recent Royal London court case has made pension savers even more vulnerable to pension scammers. We need a change in the law to make it easier to block suspicious transfers to protect the public’s pension savings. The Queen’s Speech on 18 May gives the Government the opportunity to introduce a new Pensions Bill giving pension savers greater protection.
“Scams are constantly evolving and our financial crime team is ever vigilant, working closely with Action Fraud. Scammers are increasingly coaching savers on how to respond when challenged by pension providers when a transfer looks suspicious, making it more difficult to dissuade them from going ahead. People need to take personal responsibility and be on their guard, and report anything they believe to be suspicious. Remember the old adage ‘if it’s too good to be true, it probably is.”