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24 hours to lose 22 years’ worth of pensions savings

Years of hard earned pension, investment and ISA savings could be lost to scammers in the space of 24 hours.

According to a new report by the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR), victims of scams can lose 22 years’ worth of their savings in a day.

The analysis, which forms part of the regulators’ joint ScamSmart campaign, found it could take a pension saver 22 years to build up a pension pot of £82,000. This is the average size pension pot lost by victims of scams last year.

Despite the length of time it takes to accumulate pension savings, it can all be lost to scammers within the space of 24 hours; the time it takes for 24% of those surveyed to make up their minds on a pension offer.

Overconfidence was highlighted as one of the factors leading to missed warning signs of a pension scam.

The research found that nearly two-thirds of pension savers are confident to decide on their pension, but the same proportion would trust someone offering pensions advice out of the blue.

An unsolicited approach to talk about your pensions is one of the biggest red flags of a scam.

Another interesting finding within the research was a correlation between education and falling victim to a scam. The more highly educated the person, the more likely they were to become a victim.

University educated graduates were 40% more likely to accept the offer of a free pension free from a company they haven’t dealt with before. 21% of more educated savers were expected to take up an offer of early access to their pension pot.

Free pension reviews and the offer of early access to a pension pot are further red flags suggesting a pension scam.

The FCA and TPR pointed out in their report that pension scams can have a devastating impact on their victims.

“We know many people have big plans for their retirement, whether it’s seeing new places, learning new skills or helping their families out financially. Pension scammers destroy those dreams, often forever. So be ScamSmart. Reject unsolicited approaches offering ‘help’ with your pension and get advice from an FCA authorised firm before making big changes to your pension fund. Make sure your lifetime savings stay yours.”

Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said:

The consequences of falling for a pension scam can include being left with limited income in retirement, and little or no opportunity to work and save to rebuild pension pots.

For this reason, the regulators want pension savers to be aware of the warning signs of a scam and check who they are dealing with before making important decisions about their pension savings.

“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.”

Nicola Parish, Executive Director of Frontline Regulation, TPR, said:

The FCA and TPR recommend four easy steps that pension savers can take to protect themselves from the scammers.

  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 FCA authorises the firm you are dealing with.
  3. Don’t be rushed or pressured into making any decision about your pension.
  4. Consider getting impartial information and advice.

“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.”

Honey Langcaster-James, psychologist, added:

If in doubt, or if an offer seems too good to be true, proceed with caution and get a second opinion before making a lasting decision about your pension.

There’s never a need to rush into decision making when it comes to such a valuable financial asset. Don’t fall victim to pension scams and risk losing a lifetime worth of savings in a short space of time.

Jon Doyle24 hours to lose 22 years’ worth of pensions savings