Cash-strapped Brits looking to draw on their pension pot to cope with the rising cost of living are at risk of predatory scam tactics, the UK’s financial watchdog has warned today.
New research from the Financial Conduct Authority today found that a quarter of consumers are considering pulling cash from their pension earlier than planned to cover the soaring costs of living.
But the watchdog warned today that scammers were now circling consumers and encouraging them to draw down cash using ‘misdirection’ tactics to con victims.
Scammers may offer false pension reviews before making off with the cash one given access, the FCA said.
“The rising cost of living is affecting people at all savings levels, and pension scammers are taking advantage of this,” said Mark Steward, executive director of enforcement and market oversight at the FCA.
“Misdirection in this context means victims are lured in with the promise of a better lifestyle in retirement, or to support their living costs with pension savings. The scam then takes place right in front of their eyes, and it means thousands can be lost, for good.”
Official figures show that the amount of savers pulling pension cash for the first time has increased in the past year as costs rise, rising 18 per cent from 596,080 to 705,666.
Analysts at AJ Bell said it was “inevitable” that scammers would swoop amid a period of financial strain.
“Recently published data shows the number of savers accessing their retirement pots for the first time surged in 2021/22, a trend undoubtedly linked to the rising cost of living,” the said.
“This combination of vulnerability and rising numbers of people accessing their retirement pots is like blood in the water to fraudsters, who will often employ Derren Brown-style con tricks and misdirection to exploit people’s lack of confidence and understanding of pensions.”