Four ways scammers could break into your pension pot
If you think you'd know a pension scam when you see it, think again. According to a report by Citizens Advice released today, nearly nine out of ten (88 per cent) people are oblivious to the common tricks that pension fraudsters pull, despite three-quarters (76 per cent) feeling confident that they were crafty enough to avoid the traps.
"It’s difficult for consumers to stay ahead of pension scams as they evolve," said Gillian Guy, chief executive of Citizens Advice. "Many scammers use professional looking websites and leaflets to fool their victims into signing up to free pensions advice or cold call with offers of unusually high investment returns."
Here's four ways you could be putting your retirement fund at risk:
Following up unsolicited advice
The Citizens Advice research discovered that as many as 10.9m people, including 2.4m aged between 55 and 64 years old, have received some sort of unsolicited contact about their pension since April 2015 and that almost two-thirds (64 per cent) of consumers would considered taking up such uninvited advice. However, many people would not do more than the most basic of checks to determine whether an offer was genuine and only a third (33 per cent) would research the source's legitimacy on the Financial Conduct Authority's website.
Trying to tap into your pot before you're 55
Last April heralded the introduction of pension freedoms which allowed people to access their pension without having to first purchase an annuity. However, these easier access rules only apply to those who are 55 or older. Anybody who is yet to blow out the candles on their 55th birthday cake who receives an offer to withdraw a lump sum from their retirement savings is not only potentially dealing with a scam artist but could also be left with a tax bill of 55 per cent as a penalty for accessing their pension early.
Getting on board with high returns
Citizens Advice believes that anybody offering a return on investment of more than eight per cent or suggesting you need to transfer your money overseas should be treated with an incredibly hefty pinch of salt.
Handing out your details in return for free advice or a free review
Rather than trying to lure people in with offers of immediate cash returns, some fraudsters are now taking a softer approach by offering free pensions advice or a free pensions review. The aim of their game is not to help you make better investment choices for the future, however, but to farm your information to act as a lead for other scams. Citizens Advice's research discovered that this type of hoax is most often aimed at those aged between 45 and 54.