Finance / Citizens Advice warns of rise in pension scams following reforms
Citizens Advice warns of rise in pension scams following reforms
7 August 2015
Fraudsters are bombarding people aged over 55 years old with cold calls and emails offering bogus pension opportunities as they look to take up the new retirement freedoms, according to new evidence from Citizens Advice.
Four months after the pension reforms came into effect, figures from the consumer body showed that two in five members of Citizens Advice staff helping to offer the Government’s new Pension Wise guidance service have seen people repeatedly targeted with pension scams. A further one in 10 pension staff saw people who had either responded or fallen prey to a scam.
Pension Wise is a free service offered to help people decide what to do with their money in the light of the new flexibilities, which mean that people are no longer required to buy a retirement income called an annuity with their pension savings when they retire. Citizens Advice offers face-to-face guidance as part of the Pension Wise service.
Half of Citizens Advice pension workers think that pension scams are evolving into investment scams, targeting the cash lump sums people can release from their pension pots. A further third of staff from across the service think that scams targeting the over 55s have increased.
Gillian Guy, chief executive of Citizens Advice, 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.
“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. We will be monitoring pension scams closely in order to track how they are evolving, and warn consumers what to look out for.”
Pensions Minister Baroness Ros Altmann urged people not to “fall foul of conmen who want to snatch your money”.
She said: “If you receive emails, or junk mail with promises of get-rich-quick schemes, chuck them in the bin.
“And if you get cold-called by someone offering a pension review or help to trace a lost pension, hang up because the chances are it’s a scam.”
Emerging scams seen by Citizens Advice include:
- Unspecified financial products. People are asked by fraudsters to give them access to their pension pots, who would then invest them into financial products on their behalf. Despite offering a high rate of return, scammers were unable to explain what the investments might be.
- Offers of “free pension reviews”. People are texted or cold-called with offers of a free pension review. The caller then asks to visit the person in their own home, bringing paperwork that would allow them to get access to their pension details. One man responded to an internet advert for a free pension review, and was visited by someone who claimed to be an independent financial adviser but could not describe any investments.
- Investments for pension cash. People are approached with offers to invest their pension cash into products such as property overseas or fine wines. One investment scam featured two salesmen, one who visited the potential customer to get access to his pension details, and a second to encourage him to invest his pension and any other savings into property in South Africa.
Economic Secretary to the Treasury, Harriett Baldwin, said: “We are working tirelessly to shut down illegal scams and bring scammers to justice.
“We’ve already made it illegal to imitate Pension Wise, are running scams awareness campaigns and have set up the Financial Conduct Authority which has the power to prosecute scammers.
“If you are in any doubt about how to spot a scammer or want to talk through your retirement options, I urge you to visit the Pension Wise website or book a free telephone or face-to-face guidance session.”
The research, which was carried out in June, surveyed 468 Citizens Advice staff across England and Wales, comprising 283 managers, staff and volunteers and 185 Pension Wise staff.