A couple of years ago, the Government revolutionised the way pensions work, with the introduction of the pension freedoms. These rule changes did away with the requirement to turn your pension pot into an annuity, opening up the potential for individual savers to take control of their savings and use them in whatever way they chose to.
While this has been good news for many savers, it has also created opportunities for fraudsters to get their hands on thousands of people’s hard-earned pension pots. Indeed, according to figures from the Government, around £43 million of pension money has been stolen by scammers over the last three years, with £5 million of that stolen in the first three months of this year alone.
The scams often work in the same way, with older people contacted out of the blue – whether over the phone, by email or text message, and offered an apparently “can’t miss” investment opportunity. The exact nature of the investment varies significantly, from ‘social’ investments like care homes or educational facilities, to films and even land overseas.
Of course, once the scammer sweet talks the victim into handing over the cash, they promptly disappear, leaving the victim severely out of pocket. Government figures suggest the average pension scam victim has lost out to the tune of £15,000 each.
Steps have been taken to address these scams, with the Government confirming plans to ban pension-related cold calls, texts and emails, which will be enforced by the Information Commissioner’s Office. Firms found guilty of ignoring the rules can be hit by fines of up to £500,000.
Exceptions will be made where the firm has an existing relationship with the saver or where they have requested information about an investment. It’s also important to note, though, that the Government hasn’t actually set out a timetable for implementing the ban; it could be some years before it is actually in place.
As a result, it’s up to you to take steps to protect your pension pots. That means being immediately suspicious of any investments raised in cold calls. If you’re approached, do not allow the salesman to rush you to make a decision, and ensure that you do comprehensive research before agreeing to anything – preferably speaking with an experienced financial advisor who can check it out for you.
Building a pension to provide for your later years will take a long time, but all of that hard work can disappear very quickly thanks to pension scammers. While the cold call ban is a good first step in tackling these scammers, it is crucial that everyone is on their guard when being presented with an apparently “fantastic investment” for their pension funds.
Remember the saying “If it looks too good to be true, it probably is!”
Heir Tight Wills helps clients put in place robust provisions and valid documents, to protect their loved ones and their assets both during their lifetime and after their death – and works with a number of experienced financial advisors. For a FREE Consultation to discuss writing or updating your Will & estate planning provisions, contact Rachael Rodgers on 0845 519 7585, or CONTACT US via email.