It is day two of Cyber Scotland Week and we turn our attention to scams – specifically pension scams. These scams are not exclusively an online issue, but you our members may be lured by online adverts or unsolicited email messages. It is also entirely possible that a third party may imitate SPPA by spoofing a webpage or email that leads a member into thinking they are dealing with SPPA.
Across the pensions industry, victims lose an average of £91,000 and The Pensions Regulator has taken new steps to address this problem alongside the new Pension Schemes Act 2021 which enshrines rules for scheme managers covering due diligence measures for transfer requests and issuing members with warnings of high-risk transfers. The Pension Scams Industry Group (PSIG) estimate that 5% of all transfer requests give trustees and scheme managers a cause for concern.
A typical pension scam will try and lure people with promises of upfront cash and one-off ‘deals’ with ‘guaranteed’ high returns or appearing as legitimate investment opportunities. Scammers might try to persuade members to cash in their pension, either the whole lot or a large sum, and hand the money to them to invest.
The Money Helper website collates some common tell-tale signs of a pension scam:
- Unsolicited approaches by phone, text message, email or in person. Since January 2019, there has been a ban on cold calling about pensions. This means you should not be contacted by any company about your pension, unless you’ve asked them to contact you.
- When a firm doesn’t allow you to call them back.
- Where you’re forced to make a quick decision, are pressured into doing so, or are encouraged to transfer your pension quickly and send documents by courier or get a personal representative rushing you. Never be rushed into a decision.
- Where contact details you’re given, or on their website, are only mobile phone numbers or a PO box address.
- When they claim they can help you or a relative unlock a pension before the age of 55, sometimes known as ‘pension liberation’ or ‘pension loans’. Only in very rare cases, such as very poor health, is this possible.
- When they claim to know of tax loopholes or promise extra tax savings.
- Offer high rates of return on your investment but claim it’s low risk. Investments can go up as well as down, so if it sounds too good to be true it probably is.
- Offers or mentions of ‘one-off investments’, ‘time-limited offers’, ‘upfront cash incentives’, ‘free pension reviews’, ‘legal loopholes’ or ‘government initiatives’.
- Claiming to be from legitimate organisations – legitimate organisations will never contact you without your permission first.
- There might be little or nothing in the way of contact names, addresses or phone numbers, but there might also be lots of people or firms involved. The more people involved, the more likely it’s not legitimate.