The pensions regulator, the Financial Conduct Authority and the Money and Pensions Service (MaPS) have warned pension scheme administrators and savers of a potential heightened risk of scammers.
The three organizations are all members of the Pension Scams Action Group, a multi-agency task force dedicated to protecting savers from scams.
Although the three organizations have yet to see evidence of an increase in pension scams, they said they want to act preemptively given concerns about the cost of living crisis and rising unemployment rates. interest.
They believe that scammers will seek to take advantage of economic uncertainty.
Nicola Parish, executive director of frontline regulation and spokesperson for TPR’s pension scams action group, said: “Scammers are exploiting uncertainty. And savers’ worries about their finances can make them more vulnerable to common fraudster tactics.
“Scammers can pose as people or organizations that savers trust.
“They may contact savers out of the blue to make promises that seem too good to be true – because they are.”
Regulators have also raised concerns about the impact of recent economic turmoil, such as extreme movements in gilt yields.
They warned it could lead savers to mistakenly decide there is a risk to their pension pots and make hasty decisions about their finances.
AJ Bell, head of retirement policy, Tom Selby, said: “All of this uncertainty will inevitably have made people more vulnerable to scams and more at risk of making bad retirement decisions, like withdrawing their entire pension in one go. once and potentially pay thousands of pounds. in unnecessary income tax as a result.
“The reality was that the post-mini-budget problems we witnessed, and the subsequent intervention by the Bank of England, were intended to prevent a ‘death spiral’ in UK government bond sales, rather than there being a direct or immediate threat to people’s pensions.
“The hedging instruments at the heart of the crisis were held by defined benefit (DB) plans, which means that the majority of defined contribution (DC) plans were not directly affected.
“Even in the case of defined benefit schemes with LDI exposure, provided the employer was not at risk of bankruptcy, their pensions should have been secured.
“It is vital, as the dust settles on the ILD crisis, that all parties involved in communicating the issue reflect on the unnecessary distress caused to people who thought their hard-earned pensions might not be secure.”
Charlotte Jackson, head of counseling services and client protection strategy at MaPS, called on savers to seek free advice from MoneyHelper’s retirement specialists before making important decisions.
Common signs of a retirement scam include:
- to be contacted out of the blue
- expressions such as “pension release”, “loan”, “loophole”, “savings advance”, “one-time investment”, “cashback”
- guarantee of better returns
- help release money from a pension before the age of 55, not to mention the HMRC tax bill that may arise
- high pressure sales tactics – limited time offers to get the best deal; use couriers to send documents, which wait for them to be signed
- unusual high-risk investments, which tend to be offshore, unregulated, with no consumer protections
- complicated investment structures
- fixed-term retirement investments – which often means people transferring don’t realize something is wrong for several years
The Pension Scams Action Group has also called on savers to beware of recovery room or secondary bedroom systems.
This happens when scammers approach people who have already been scammed and offer to help them get their money back for a fee.
Parish added: “Anyone who receives an unexpected call about their pension – even if the call appears to be from a reputable organization – should hang up.
“Reputable callers are unlikely to call out of the blue and they won’t ask for money up front to pay for their services.”
Pension plan trustees have also been urged to remain alert to the risks of scams and suspicious transfer requests.
Trustees are urged to follow best practices to protect savers from scams, including warning savers of the increased risk of pension and investment scams in times of uncertainty and providing some of the common signs of a scam.