Since the introduction of the pension reforms – which allowed retirees full access to their pension pots – two in five staff at the charity have seen people targeted repeatedly with pension scams, while a further one in 10 saw people who had either responded or fallen prey to a scam.
Gillian Guy, chief executive of Citizens Advice, said the charity would be monitoring pension scams closely in order to track their development and warn consumers what to look out for.
“Pension and investment scams are particularly dangerous as they can destroy people’s entire pension pot, leaving them with little or no savings for retirement,” she said.
“Opportunistic fraudsters are finding new ways to go after people’s pension pots including offering free pension reviews and promising to invest in funds that don’t necessarily exist.”
Half of the charity’s workers said they believe that pension scams are “evolving” into investment scams, targeting the cash lump sums people can release from their pots – while a further third of staff think scams targeting over 55s have increased.
The majority of people said they were contacted by phone, while others said fraudsters got in touch via email, post, and text message with scams including:
-Unspecified financial products – in which fraudsters invest retirees’ money with the promise of high returns;
-Free pension reviews – in which fraudsters acquire retirees pensions details by offering retirees a free pension review; and
-Investments for pension cash – in which retirees are talked into investing into unregulated overseas investment schemes.
Imitation game
Economic secretary to the Treasury, Harriet Baldwin, said the UK Government has already made it illegal to imitate Pension Wise – a free service set up to help retirees understand their options following the pension reforms – and is running scam awareness campaigns.
“Additionally, the Financial Conduct Authority has the power to prosecute scammers,” she said.
Confusion
Keith Churchouse, chartered financial planner at advice firm Chapters Financial, said the pension freedoms came in very quickly which has led to confusion among the public.
“Sadly, there are unscrupulous individuals that have used this confusion to their advantage to scam hard working people who want to take pension benefits,” he said. “The advice I would give to clients is to never engage with a cold call when it comes to pensions. Sadly, many retirees have never had a lot of cash, so they take all their money out at once.
“The FCA runs a register of authorised financial advisers and I would recommend that an individual check that register before making dealings with these cold callers.”
He added that clients should be made aware that a pension is designed to provide income throughout the whole of retirement, and therefore care should be taken about accessing it in its entirety.
Dean Mullaly, managing director, IFA, UK & International, at Mark Dean Wealth Management, said it was a responsibility of the central government to make the general public aware of scammers and point them to the FCA register to seek a suitably qualified adviser.
He said members of the public with no understanding of financial matters will be so interested to hear about it from a cold caller over the phone that they may also trust them.
“There needs to be a way to ensure that the new pension freedoms can only be authorised or signed off by a fully qualified and registered independent financial adviser.”
