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Being targeted by a scammer with an eye on your pension could mean losing decades of savings in a matter of hours. It can have a devastating impact on your retirement plans and financial security. Understanding how pension scams operate could help you spot one.

According to research, the average pension holder targeted by criminals loses £82,000. It’s a sum that’s likely to have taken years to build up. But once fraudsters have their hands on it, it’s unlikely you’ll get it back.

It’s easy to see why scammers target pensions. They are often amongst the largest assets we own. On top of this, many people don’t fully understand the regulations around pensions, which fraudsters exploit, or frequently check their savings. This combines to create a lucrative proposition for criminals.

The research suggests that 42% of pension savers, which would equate to five million people in the UK, could be at risk of falling for some of the most common tactics. However, keeping these seven red flags in mind could help you spot pension scams.

1. You’re contacted out of the blue

Cold calling in relation to pensions was banned in early 2019. As a result, if you receive unsolicited contact, it’s likely to be a scam. This doesn’t just cover calls but text messages and emails too. Always be cautious of contact from someone you don’t know or haven’t engaged with in some way. If in doubt about the validity of the contact, take a step back and check the Financial Conduct Register to compare details.

2. Being offered a free pension review

We all want to get the most out of our pension savings. So, a free pension review can seem pretty appealing. However, it’s one of the most common terms used in pension scams for that very reason. Effectively reviewing a pension and considering the best course of action for each client takes time and research. A ‘free’ pension review could end up costing you far more than a financial adviser’s usual fee.

3. Claims that you can unlock your pension before the age of 55

Pension Freedoms were introduced in 2015 to give retirees more flexibility and responsibility. Fraudsters have been taking advantage of this by claiming they can provide you with even more flexibility. It’s not unusual for pension scams to claim they can help you access your pension without incurring charges before your 55th birthday; in most cases, this simply isn’t possible. It’s only possible in very rare circumstances, such as the diagnosis of a terminal illness, and should then be done through your pension provider.

4. They try high-pressure sales tactics

From a scammers point of view, the less time you have to think about an offer, the better. You’re more likely to overlook telltale warning signs if you make a decision quickly. Therefore, they may use high-pressure sales tactics. This could include stating the offer is time-limited or saying they’ll immediately send a courier with the necessary paperwork. Decisions relating to your pension could affect you for the rest of your life, don’t be rushed into making a decision. A genuine pension adviser will understand why you want time to weigh up your options.

5. Offers of guaranteed high returns

Wouldn’t it be great if you could invest and receive guaranteed high returns? Unfortunately, it’s not possible. All investments involve some element of risk and guarantees can’t be made. If someone offers you this, ask yourself why everyone isn’t already investing in the opportunity. Alternatively, pension scams may state investments are high return low risk. Again, this should be a warning sign.

6. Unusual investments are suggested

If you’re thinking of investing, it’s important to understand where your money is going. Pension scams will often involve unusual investments, such as overseas property or forestry. Whilst such investment opportunities can be genuine, they typically aren’t suited to the average investor. Any investment decision you make should consider your financial plan and existing assets too, so don’t rush into handing over your money even when a deal sounds appealing.

7. They try to keep you talking

Scammers won’t want you to talk to other people and certainly not research if what they’re saying is true. They’ll try to keep you on the phone or in contact with you as much as possible. Never make a decision about your pension without taking some time to think it through.

If you think your pension has been targeted, contact your pension provider. They may be able to block further transactions if you act quickly. You should also contact Action Fraud and report the crime.

If you receive any suspicious contact, don’t engage. Remember, if it’s too good to be true, it probably is. Pension scammers use sophisticated tactics to get you to trust them and it can be easy to fall for their lines. However, keeping the warning signs in mind can help protect your savings. Understanding your pension and long-term financial planning can also help you spot criminal activity. Please contact us to talk about your plan if you have any concerns.