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Pension scammers are after your money!

Silversurfers.com point out how to spot a scam

With the over 55s being able to take a cash lump sum from their pension from 6th April 2015 many people will be thinking about how to improve returns for their money by investing a cash lump sum. Sadly, there are more and more scams being set up to get hold of your hard-earned pension pots, so, it’s more important than ever to be aware of unscrupulous investment schemes.

Some scams are so clever that you won’t even know that they are fraudulent for years.

If it’s too good to be true – it is!

Remember the unbelievable interest rates offered by the Icelandic Banks in 2005/7/8? Many investors were lulled into a false sense of security because they were investing with a bank and they lost everything.

Scammers will use high pressure sales techniques ranging from temptation to pressure and flattery combined with a range of tactics including text messages, cold calls, phone calls, website pop-ups, letters or even someone coming to your door. A courier may arrive at your door with paperwork which requires immediate signature. And scams can originate overseas as well as in the UK.

They may invite you to have a “free pension review” or present you with an amazing one-off investment opportunity or even a “legal loophole” which will enable you to receive more than 25% of your pension or “liberate” your pension before you are 55. You should know that if you take your pension savings early, it can result in tax charges of more than half of the value of the money you take out.

If you see persuasive marketing materials which describe returns of over 8% on your investment or a proposal is made to you to put all your money into one investment, please check that it is genuine, most financial advisors would advise you diversify your money.

Act in haste, repent at leisure

Don’t be rushed into anything. Take your time and review all the options available to you. Speak to an Independent Financial Advisor or ask your bank or building society for advice. Look at investments offered by The Post Office or the Government or investments such as the over 65s bond from NS&I called the 65+ Guaranteed Growth Bonds (the four year bond pays 4%).

Some golden rules to keep the scammers away

The Pensions Regulator advises us to “put the phone down immediately” if some cold-calls you offering an investment opportunity.

If you feel uncomfortable about an approach then take a look at the Financial Conduct Authority which has a “Scamsmart” warning list online at www.fca.org.uk/scamsmart.

You can also make sure the firm is registered with the Financial Conduct Authority to conduct business before you agree to anything. Use the FCA’s online firm check at fca.org.uk/register or call 0800 111 6768.

Trust your instincts – if you think you are being approached by a pension scammer call The Pensions Advisory Service (it is government backed) on 0300 123 1047. Or you can check with an adviser registered by the Financial Conduct Authority register or call 0800 111 6768.

Scammer Red Flags

Hand waving a red flag

Here are some red flags to spot the scammers:

  1. Being approached by someone you don’t know, out of the blue over the phone, via text message or in person door-to-door
  2. Being pressured into making a decision
  3. Where the only contact details they give you or are on their website are a mobile number and a PO Box Address
  4. When a firm doesn’t want or allow you to call them back
  5. High charges, typically 20% to 30% for entering into one of these schemes.

What to do if you have been scammed

If you do become a victim please report it to Action Fraud and if you have signed papers and realise it is an investment scam report it straight away to Action Fraud by calling 0300 123 2040 or online.

The Financial Conduct Authority also has a Consumer Helpline on 0800 111 6768.

 

Disclaimer

The contents of this article are for reference purposes only and do not constitute financial or legal advice. Independent financial or legal advice should be sought in relation to any specific matter. Articles are published by us without any knowledge or notice of the circumstances in which you or anyone else may use or rely on articles or any copy of the information, guidance or documents obtained from articles. We operate and publish articles without undertaking or accepting any duty of care or responsibility for articles or their contents, services or facilities. You undertake to rely on them entirely at your own risk, and without recourse to us. No assurance of the quality of articles is given or undertaken (whether as to accuracy, completeness, fitness for any purpose, conformance to any description or sample, or otherwise), or as to the timeliness of the publication.

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