National Scam Awareness Month
July 2016 is National Scam Awareness Month, and with scamming on the rise this has never been more important. An increase in fraudsters targeting under 55’s in early pensions release scams is just one of a number of reasons why police estimates show that £13.2 million was lost to pensions liberation scams in the 12 months to February 2016 – an increase of 26% on the previous year While increased pension freedoms have been a highly positive thing for many, the lure of large sums of readily accessible pension money has been attracting a steady stream of fraudsters. Pension scam awareness is vital to bring the number of victims down. Common investment scams including investing in airport parking, forestry, storage and luxury foreign accommodation. Always beware of an unsolicited offer and be sure to contact a regulated advisor unconnected with the offer for unbiased advice.
Pension Scam Awareness, Common Signs of Fraud:
- “Free” pension reviews, often offered as part of an apparent “Government initiative”. This is a false offer. The pension guidance public services, including Pension Wise, that are available free of charge require the individual to make the initial contact and will never make unsolicited calls.
- An offer of investments, usually promising guaranteed investment returns of 6% – 8% per annum, these are often in non-standard investments such as luxury products, high-risk or speculative investments or space and storage. Remember, it’s always best to spread your pension savings over a number of investments to diversify the risk, and it’s generally not a good idea to “put all your eggs in one basket”. The contact is often made by an “introducer” and they are often not regulated by the FCA and therefore normal consumer protections do not apply.
- Savers are pressured to rush into signing a letter of authority so that the scammers can collect information on their pensions. Pensions are a long-term savings vehicle and are not suited to very short-term decision-making. They may even appear to be helpful and offer to collect the information via courier – this is a pressure tactic to get people to hand over their information quickly.
- Scammers also offer to access the individual’s pension fund before the age of 55, through ‘legal loopholes’. This is not allowed, accessing a pension fund before 55 could mean the individual loses their pension fund and suffers a high tax charge of 55% from HMRC for making an ‘unauthorised payment’.
For more detailed advice on avoiding pension scams please visit pensionwise.gov.uk . The Citizens Advice bureau also offers an excellent service and further details on their pension scam awareness page. You can support national scam awareness week on social media with the hashtag #scamaware.