We all like to think we could spot a scam. But it's worth getting to know how fraudsters operate, and how to protect yourself and your pension savings.
Pension scam victims lost an average of £82,000 last year, according to new research from the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).
New analysis as part of the regulators' joint ScamSmart campaign reveals that it would typically take a saver 22 years to build a pension pot of that level. Despite this, almost one in four people (24%) surveyed admitted to taking 24 hours or less to decide on a pension offer.
What's more, overconfidence could lead to savers missing the signs of a scam, the regulators warned. Although nearly two-thirds (63%) said they are confident in making decisions about their pension, the same proportion (63%) would trust someone offering pensions advice out of the blue -- one of the main warning signs of a scam.
And the more highly educated the person, the more likely they are to fall for a pension scam. Those with a university degree are 40% more likely to accept a free pension review from a company they've not dealt with before, and 21% more likely to take up the offer of early access to their pension pot. Both of these are common scam tactics.
Victims of pension fraud can be left facing retirement with limited income, and little or no opportunity to build their years of savings back up. Because of this, the regulators are urging savers to get to know the warning signs of a scam and always check who they are dealing with before making a decision on their pensions.
Nicola Parish, executive director of frontline regulation at TPR, said: "Pension scammers ruin lives, stealing away decades' of savings with professional-looking websites, 'expert' advice and an easy manner making it tough to spot the fraud. But once you sign on the dotted line, often there's no second chance. Scams can happen to anyone, so before making any decision about your pension, take your time, be ScamSmart and always check who you are dealing with."
Psychologist Honey Langcaster-James added: "Scammers employ clever techniques, such as seeking to establish 'social similarity' by faking empathy and a friendly rapport with their victims. They can win your trust in a short space of time and by engaging with them you leave yourself vulnerable to losing a lot of money very quickly. People need to know how to spot the signs of a scam so they don't fall for psychological tricks."
The regulators recommend four simple steps to protect yourself from pension scams:
1. Reject unexpected pension offers whether made online, on social media or over the phone.
2. Check who you're dealing with before changing your pension arrangements -- check the FCA Register or call the FCA helpline on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA.
3. Don't be rushed or pressured into making any decision about your pension.
4. Consider getting impartial information and advice.
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