We’ve heard the scare stories, now you can find out how to avoid pension scammers before it’s too late. After all, no-one wants to be the victim of a pension scam!
- Pension scam victims are losing an average of £91,000
- How to use the FCA register and why you should check it
- Pensions advice specialists, Portafina, offer tips on how you can avoid scams and check legitimacy to prevent being a victim to a pension scam
Pension Scam
Recent TV advertising from the Financial Conduct Authority (FCA) and the Pensions Regulator has highlighted how easy it can be to fall victim to a pension scam.
With new figures revealing that victims are losing an average of £91,000 per person due to pension scams, FCA approved pensions advice specialists, Portafina, has highlighted the one thing to do to ensure protection against a pension scammer, and five other things to look out for before it’s too late.
Check if they’re registered and authorised by the FCA
If you fear you may be falling victim to a scam the best course of action is to check the FCA register. Checking this database is the easiest way to see if a financial company or individual is regulated.
Simply search for the company or adviser’s name and you will be able to see whether they are listed and check that their information is correct. For a step by step guide on how to check the register, please visit www.portafina.co.uk/blog/how-to-stay-safe-and-not-fall-for-the-pension-scam-tricks
Watch out for ‘red light’ words
There are a couple of terms that are important to look out for when relating to pensions.
A few words and phrases that should raise warning signs are:
Pension liberation
Cashback
One-off investment
Limited time offers
Loophole
Avoid anyone who promises ‘guaranteed returns’
A company which promises to deliver ‘guaranteed results’ (especially a high guaranteed rate of return) is likely to be a scam. There’s a chance that the investment may be overseas where there is no consumer protection, so if it looks too good to be true, it probably is!
You should be wary of any company that says you can take out your pension before the age of 55. It’s not possible to access your pension before you are 55 without facing a huge tax bill, except for a few very specific circumstances such as terminal illness.
If you transfer your pension with a company who promises early access you could face a tax penalty that could cost you your entire pension pot!
Don’t make a quick decision
Never let anyone pressure you into making a quick decision, be cautious. If a company is pushing you to make a quick decision, it’s is likely to be a scam, so don’t rush and take your time. And if you’re ever unsure, it’s best to contact a different independent financial adviser to get some more advice.
Ask questions
Asking questions will help you to identify whether the company is legitimate, so ask as many questions as you have.
Some good questions to ask are:
What is your FCA number?
Can I call you back? Reputable pension companies will be happy to do this whereas scammers tend to be more reluctant to give out contact details
How long have you been a financial adviser or company?
Can I visit your offices?
Pension advice specialist, Jamie Smith Thompson said: “Making decisions involving your hard-earned pension is never a decision you should rush, and the fact that there are people actively trying to scam people out of their pensions shows that we should all be exercising extreme caution.
“The new FCA and Pensions Regulator campaign has really got people thinking and talking more about pensions. Yet, our experience is that it has resulted in people complaining about the government’s dealing with the State Pension, rather than tackling the pension scams at hand. It’s clear that we need more action.
“Having said that, the campaign is a positive starting block and a step in the right direction when it comes to creating more awareness about scams.
“If you do decide you want to make a change to your pension pot, make sure you’re speaking to someone who knows what they’re doing, can clearly explain your options to you and will give you the time you need to make the right decision. Most importantly, check that they are a regulated specialist by making use of the FCA register!”
To find out more about identifying scammers from legitimate financial advisers, visit: https://www.portafina.co.uk/scam-awareness
