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'Flip the context' and protect your pension savings

Senior man working on a laptop at home

If a stranger in a pub approached you with unsolicited financial advice, your first instinct would probably be to politely refuse. But what if the same thing happened online?

The Financial Conduct Authority (FCA) has found that pension holders are nine times more likely to accept advice from someone online than they would from a stranger met in person. And they are five times more likely to be interested in a free pension review from a stranger online than from someone in their local pub.

Free pension reviews, time-limited offers and help to release cash from a pension are all signs of a scam, whether these approaches are made online or at the bar, the FCA warned.

To avoid falling victim to a scam, pension savers are being urged to 'flip the context' and imagine what they would do if they received pension advice from a stranger while enjoying a quiet pint in their local, or out shopping with friends. It's thought that putting these signs in an everyday, offline setting can make pension scams easier to spot and avoid.

Since the start of this year, savers have lost more than £2m to pension scammers. Pension pots of all sizes are targeted, with reported losses ranging from under £1,000 to as much as £500,000, according to complaints filed with Action Fraud.

The average loss was £50,949 -- more than double last year's average of £23,689.

Yet despite more than two thirds of pension holders (68%) claiming they were confident they could spot the signs of a pension scam, the research found that this confidence may be misplaced. Only around a quarter of pension holders (28%) realised that a free pension review was a sign of a scam, and just 40% knew to be wary of opportunities to transfer your pension.

This is particularly concerning, as over-confidence can lead to pension holders letting their guard down and failing to check whether any firm they deal with is on the FCA Warning List -- one of the best ways to help avoid pension scams.

According to the FCA, five common warning signs of a pension scam include:

  • Being offered a free pension review out of the blue
  • Being offered guaranteed higher returns -- claiming they can get you better returns on your pension savings
  • Offered to help to release cash from your pension, even though you're under 55
  • High-pressure sales tactics -- scammers may try to pressure you with 'time-limited offers' or even send a courier to your door to wait while you sign documents
  • Unusual investments which tend to be unregulated and high risk

"Fraudsters will seek out every opportunity to exploit innocent people, no matter how much they have saved," said Mark Steward, executive director of Enforcement and Market Oversight at the FCA.

"Check the status of a firm before making a financial decision about your pension by visiting the FCA Register. Make sure you only get advice from a firm authorised by the FCA to provide advice, before making any changes to your pension arrangements."

Fidelius is authorised and regulated by the FCA and our FCA reference number is 188615.

Posted by Fidelius on August 2nd 2021

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