The pension freedoms introduced by the UK government in 2015 have given millions of retirees greater flexibility with their money. Sadly, without the right advice some have seen scammers take their pensions.
Don’t be alarmed. The number of people being conned when it comes to investing pension pot cash is small. However, it remains an issue. Some con artists look to take advantage of people who are keen to earn the best possible returns from the funds they have available.
Wanting a healthy income in retirement isn’t greedy. People want the best for themselves and their families. They have worked hard. They have saved and paid into company or private pension schemes for many years.
Most reach retirement age and wonder whether they will have enough to enjoy the things they had always dreamed about. That’s when some offers of great riches seem too good to be true.
Usually, they are too good to be true!
The pension freedom generation
Since 2015, from 55 years of age, people can choose what they do with their pension pots. Before that, most were forced to purchase annuities – investments that would deliver a fixed annual sum of money for the rest of their life.
Then everything changed. The sale of annuities dropped significantly as many retirees chose to take a 25% tax free allowance and then draw down income from their pots.
Others, however, were seduced with tempting offers by salespeople masquerading as pension experts. People were offered access to exclusive investment schemes that would yield unheard of interest rates.
Phone calls, text messages and emails told would-be investors about start-up ventures that were set to rocket in value.
Then the inevitable happened. Housing developments failed to materialise. Products were never launched. The companies that promised so much went bust. It was smoke and mirrors.
Who loses their pension to scammers?
Although many people lost investments in the years immediately after the changes were implemented in 2015, the con artists are still shamelessly operating.
Across 2017, there were 253 victims who lost more than £23 million to pension scammers. The average loss was £91,000.
However, according to the Action Fraud, between April and June this year, around £51m was lost to fraudsters. That’s in just three months!
People make poor decisions based on information presented by unscrupulous sales people who just want their money. In some cases, products, schemes and investment opportunities do exist. But not for long. They are for short-term gains – but only for the criminals selling them.
Innocent investors lose their cash.
How to avoid pension scams
Increasingly, pension scammers are trawling social media for victims. It’s easy pickings. Facebook and Twitter users post stories about retirement, sometimes boasting about how much their pensions are worth. Then the messages start, offering the chance to enjoy an even greater pension income.
Worryingly, a poll commissioned by the Pensions Regulator reported a shocking 32% of pension holders aged between 45 and 65 wouldn’t know how to check if they were dealing with a legitimate pensions adviser.
Worse still, because of the embarrassment factor, it is believed that only a minority of pension scams are reported. Well, if you’d lost your life savings you wouldn’t want to broadcast it – would you?
So the message is simple: keep your money matters private. At least keep them off the Internet where almost anyone can see them.
When it’s a cold call, put the phone down. You don’t know the person on the other end of the line, so why would you trust them with your money?
Pensions are big-ticket items. Would you buy a new car on a whim? Or would you assess the technical details, check reviews and then take a test drive? Your long-term income into retirement deserves the same consideration as four wheels.
Check the FCA Register
Make some checks! Take a look at the FCA Register (Financial Conduct Authority) or call them on 0800 111 6768 to see if the pension salesperson you are speaking to is authorised by the FCA to operate.
Finally, if in doubt, get impartial information and financial advice from a recognised company.
That’s what Logic Wealth Planning offers. No pressure, no hard sell, just a desire to understand what you want from retirement and what you need from a pension.
Call us if you’d like to know more: 0808 1234 321.