Staying vigilant against pension fraud

Posted on 10 September 2024, at 11:10 in Forcewide News

We received 11 reports of pension fraud in 2023 with victims collectively losing just under £70,000. New data reveals that nationally the figure was £17.7 million based on 559 reports – an average loss of £46,959 per person.

Sadly, fraud is largely underreported, so the actual numbers are likely to be much higher.

We’re backing a campaign from national fraud and cybercrime reporting service Action Fraud, warning savers to stay vigilant and protect their pensions and investments.

Our Fraud Protect Officer Claire Bounds said: “Criminals will go to great lengths to trick anyone out of their money, including their life savings. Pension fraud could be presented as free pension reviews, too good to be true investment opportunities, pension transfer opportunities, or help to release money from your pension, even if you’re under 55.

“We know that losing any sum of money saved for retirement can be devastating so we’re backing the call encouraging the public to do their research before making changes to pension arrangements.

“We recommend avoiding pension or investment options that are offered unexpectedly. Don’t let anyone rush you into making big decisions and seek advice from an independent professional service or trusted family and friends.

“We also know from latest data that the highest number of reported losses come in April when people tend to check their financial position in the new financial year, so keeping a close eye on your pension and investments will help you to spot any irregularities sooner.”

How can you protect yourself?

Here are some steps to protect yourself fraudsters trying to get your pension.

Unsolicited communication about your pension: if you get a call unexpectedly (a cold call) about your pension, the safest thing to do is hang up. It’s illegal and probably a fraudster. If you get offers via email or text, you should simply ignore them.

Seek advice first: if you’re thinking about changing your pension arrangements, you should get financial advice beforehand. If you want to find an adviser, make sure they’re authorised by the Financial Conduct Authority. Never take advice from the company that contacted you, this may be part of the scam.

Investment opportunities: don’t be rushed into making an investment. Remember, legitimate organisations will never pressure you into investing on the spot.

You should treat investment opportunities with extreme caution if there’s:

pressure to invest (e.g. time-limited offers)
downplayed risk of losing your money
promised returns that sound too good to be true

Be mindful of tax implications: you’ll pay up to 55 per cent tax on payments from your pension provider if they make an ‘unauthorised payment’. This is a payment made outside of the government’s tax rules and usually includes:

any payments before you’re 55 (there are exceptions);
a ‘trivial commutation’ lump sum of over £30,000; or
regular payments into your account after you’ve died.

For more information on pensions, please visit: https://www.moneyhelper.org.uk/

What to do if you have been a victim:

Report it: if you’re worried about a potential pension or investment scam or think you may have been contacted by a fraudster, report it the Financial Conduct Authority. Call them on 0800 111 6768 or go to www.fca.org.uk/contact.

If you have made a payment: inform your bank as soon as possible, they can help you prevent any further losses.

Action Fraud, the UK’s national fraud and cyber crime reporting centre, has information on pension and other frauds at: www.actionfraud.police.uk