How To Avoid Pension Scams

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Discussing any financial issues or concerns you might have regarding your pension and other savings with small business accountants is certainly wise, as it can be difficult to understand, especially for smaller companies that may be just starting out.

Unfortunately, it’s also worth noting that aside from potential trouble as a result of failing to understand the intricate processes and procedures involved with pensions, tax and company accounting, you could also find yourself targeted by scam artists intent on making off with all your hard-earned cash.

And even more, unfortunately, scammers these days have become incredibly sophisticated in their approach and very articulate in their messages. They also often have a lot of financial knowledge behind them, which makes them sound genuine and authentic, supported by credible websites and testimonials, all of which come together to make it very difficult indeed to tell the real article from the fake.

Scam tactics to look out for

If an individual or a company gets in touch with you out of the blue, your suspicions should immediately be aroused. Look out for any promises made of guaranteed returns and free pension reviews, and always be wary of anyone saying that they’ll be able to help you access your pension pot before the age of 55. If you feel under pressure to act quickly, it’s possible that you’re talking to a scammer and should be on your guard straightaway.

Look and listen out for words like ‘loan’, ‘pension liberation’, ‘loophole, ‘one-off investment’ and ‘free pension review’, as well as any investments described as being ethical, unique, overseas or environmentally friendly.

Remember that once you’ve transferred your money into a scam, it will likely be too late to do anything about it and you could potentially lose all your pension money, as well as be hit with big fees and tax of up to 55 per cent.

This is because you’ll pay tax on payments from pension providers if they make an unauthorised payment, a payment made outside the government’s tax rules. This typically includes any payments before the age of 55, regular payments into your account after you’ve died or a trivial commutation lump sum of more than £30,000.

What to do if you suspect a scam

If you suspect that you might have been targeted, whether you actually have or not, make sure that you report the incident immediately. You can get in touch with the Financial Conduct Authority or Action Fraud to do this.

If you’re in the middle of a transfer and suddenly think that it might be a scam, get in touch with your provider immediately and then call The Pensions Advisory Service to explain the situation.

How to protect yourself against pension scams

Firstly, if you receive a cold call regarding your pension, just hang up the phone and then report the cold call to the Information Commissioner’s Office. Should you receive unsolicited offers via text or email, just ignore them and delete the messages.

You should also check with the Financial Conduct Authority (FCA) Register to make sure that anyone contacting you is authorised by the FCA and are who they say they are. Always use the contact details on the Register and not the details that may be provided by the group getting in touch with you.

Make sure you give yourself all the time you need to carry these checks out, even if it means turning down what sounds like an incredible deal.

Last year, research from the FCA found that victims of pension scammers lost an average of £91,000 each in 2017, so as you can see it really is worth taking the time to familiarise yourself with such scams and ensure you know what action to take if you believe you have been targeted.

The same study found that 32 per cent of pension holders aged between 45 and 65 wouldn’t know how to check whether they were on the phone with a legitimate pensions adviser or provider.

It’s also thought that only a minority of scams that take place are ever reported, which can make it much harder to identify scammers and bring them to justice, while protecting people and their pension pots.

If you’d like further help or advice relating to pensions, scams or other financial matters, get in touch with us here at Fusion today.