Pension Scams are evolving – useful tips to protect yourself

Gavin Macphee


Pension Scams are evolving – useful tips to protect yourself

In truth, it is probably impossible to prevent all scamming completely, but we can and should narrow the open goal presented to scammers by the current occupational pension regime. Pension scams can be hard to spot and the scammers are evolving by being articulate and financially knowledgeable, with credible-looking websites that can make it difficult to differentiate the good from the bad.

A scam is a confidence trick that attempts to defraud a person after first gaining their confidence. It then exploits natural human characteristics. Pensions are the perfect target for scammers as most pension scheme members have low confidence and understanding of their pension. It is therefore essential to raise awareness on all scams, but pensions in particular, where knowledge levels are generally so low.

To prevent yourself from being lured into a pension scam there are a number of trigger points to be aware of, especially when considering transferring out of Defined Benefit Schemes (also known as Final Salary Schemes). These are a selection of the main ones for you to consider:

  • Being contacted out of the blue (cold calling) about a pension opportunity and subjected to a ‘hard sell’
  • Being told that the transfer values of your pension will be due to change shortly, especially with the recent increase in interest rates, and that you need to take action before they do
  • Being rushed or pressured into proceeding with any pension transfer quickly
  • Being aware that you are giving up on a protected income at retirement to invest in potentially higher risk than is suited to your attitude to risk.

These are only a few trigger points for you to be aware of.

In order for you to have the peace of mind that you are receiving correct advice that is most suited to you and your needs, it is important for you to carry out due diligence or background checks on your selected financial adviser. This can be done by checking the FCA register to see that the firm and the individual is authorised to give this specialised advice. Seeking advice from a Chartered Financial Planner ensures that you are dealing with advisers qualified to the highest degree with the highest level of ethics; alternatively perhaps consider being referred to a firm previously used and trusted by a friend.

You may also wish to refer to the FCA’s new Scam Smart website (www.fca.org.uk/scamsmart), which is designed to provide a general ‘sniff test’ on any unusual investments being proposed and to assist you generally with recognising potential pension scams.

It is important that you seek the correct advice and guidance at this crucial stage in your life from a trusted adviser. You need to feel comfortable and confident that they will be able to give you the peace of mind that what you are doing is most suited and tailored to your needs.

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