The Hook, The Hustle, The Truth sounds more like a Hollywood heist blockbuster than a campaign from the government’s pensions advice body. But such is the level of concern that fraudsters and scam artists will target pensioners from April, when accessing cash will be much easier, that the industry is making its warnings as hard-hitting as possible.
From this April, new rules will give over-55s the freedom to access their entire pension pot if they want to. These changes give pensioners welcome flexibility to choose how they spend their savings. But they also present a golden opportunity to shady operators to target vulnerable yet potentially cash-rich retirees with illegal, expensive or highly speculative investment propositions.
In the worst case scenario, victims of these scams can lose some, or even all of their retirement savings, leaving them having to live off state pension and benefits for the rest of their days, as some unfortunate investors have already found out to their cost.
The government-backed Pensions Advisory Service (TPAS) and the Association of British Insurers, the trade body for life insurance pension providers, has launched its campaign – The Hook, The Hustle, The Truth – to raise awareness of the very real threat these scams pose to retiring workers’ nest eggs.
The Hook is the carrot the fraudster uses to catch the hapless pension saver’s attention. Seemingly innocuous and appealing traps include the offer of a free pension review, immediate access to cash regardless of age or a pension loan.
Hallmarks of The Hustle are being contacted out of the blue, the suggestion that the communication is part of a government initiative, claims that a new legal loophole has been found or the offer to send couriers round the very next day to collect paperwork.
The Truth is that accessing pension savings before age 55 is not allowed in any circumstances, except where the individual is suffering from serious ill health. And any company that claims to be endorsed by the government is being dishonest.
Fraud and scams is not just a matter for those reaching retirement – all your employees over the age of 55 are potential targets so it is worth communicating these very real risks to your workforce.
TPAS has helpfully compiled its top 5 tips on how to keep pensions safe from scams: –
1. If someone calls, always call them back. Scammers are not happy to be directly contacted
2. If Government, guidance or review are mentioned by a caller, be suspicious. The official guaranteed guidance session, which will be available to all retirees, only goes live from April and in any event never makes a specific product recommendation
3. Check the Financial Conduct Authority’s register. This will confirm whether the company is registered, and if it is being investigated
4. Find out how many companies are involved in the transaction. If things go wrong, the more companies there are, the less chance you have of finding the real culprit
5. Check any interest rate to see if it is credible. Be wary of offers of guaranteed returns of 8% or more
As a benevolent employer, you have worked hard to ensure your workers have a more comfortable retirement. Let’s not let the fraudsters take that away.
Download the Pensions Advisory Service’s free infographic and put it on display in your workplace.
Source: Trine Nyborg, NOW Pensions