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Warning over pension scams

17 Apr 2015

Savers have been urged to be aware of a rise in pension scams, as criminals seek new ways to defraud pensioners.

A report by Citizens Advice studied 150 cases where pensioners have fallen victim to fraudsters. It identified five common types of scams which include encouraging pensioners to move their savings into a ‘new’ pension, fake investment opportunities and offering apparently ‘free advice’ and support which actually costs money.

In some cases pensioners are charged a fee for a service that isn’t required, while others are encouraged to part with personal information and bank details, either by email or phone.

'Scammers see pensioners as a prime target,’ commented Gillian Guy, chief executive of Citizens Advice. ‘There are many people looking to benefit from the new pension rules, including scammers. Fraudsters can ruin people’s retirement plans by taking a portion or all of a victim’s pension pots.’

Meanwhile, the Pensions Regulator recently launched a campaign to alert people, particularly those approaching age 55, to the danger posed by fraudsters.

From 6 April 2015 individuals are no longer required to purchase an annuity at 55 and can instead choose to take all their savings as a cash lump sum. However, the Regulator has warned that scammers are exploiting this change by enticing retirees with the promise of a ‘free pensions review’, ‘one-off investment opportunity’ or ‘legal loophole’, most of which are bogus.

Individuals who believe they are being targeted by a pension scam should contact the Pensions Advisory Service on 0300 123 1047. The Financial Conduct Authority’s website also has a list of known scams (see