Pension assets worth billions are being targeted by scammers according to new analysis from Just Group. In examining the FCA’s Financial Lives report, it was revealed that one in four (23 percent) of 55-74 year olds received unsolicited approaches in the 12 months to October 2020.
These unsolicited calls mainly consisted of offers for “free” pension reviews, offers to “unlock” pensions early or contact about retirement advice claiming to be from the government.
The data showed the baby boomer age group was targeted far more frequently by scammers than all other generations, with even those older than 75 being less likely to receive unsolicited approaches.
Stephen Lowe, the group communications director at Just Group, commented on the figures: “There is an epidemic of scam activity because fraudsters have worked out that the pensions of the Baby Boomer generation are rich pickings and some unsuspecting savers are open to ideas about how best to take and use that money.
“Promising quick access to cash lump sums or high returns on investments is an easy way to get people’s attention – and ultimately their cash.”
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Stephen noted the FCA regularly warns about free pension reviews which are often used to persuade people to invest in high charging, high risk schemes, while accessing pensions early can trigger huge tax penalties.
As a result of this, Stephen urged retirees to report cold calls to the Information Commissioner’s office but he acknowledged this may be easier said than done: “Unfortunately, many people are ill equipped to spot a scam having had little engagement with their pension over the years and the system isn’t helping them.”
Recently, the current approach to cracking down on scams has been criticised by the Work and Pensions Committee Chair, Stephen Timms, for being fragmented and too disparate and disconnected to be effective.
Guy Opperman, the Under-Secretary for the Department for Work and Pensions, said in recent months that he wants to see people using Pension Wise as “the norm” to encourage retirement education and understanding.
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Stephen “strongly supported” this, noting: “It’s an obvious way to help protect savers from scammers given nearly all (95 percent) of customers who attended a Pension Wise appointment felt confident in their ability to avoid pension scams.
“Our research shows that a behaviour can only be considered a behavioural norm when about seven in 10 people are acting in that way which is a four or five-fold increase on current usage levels.
“That’s an ambitious but achievable target for the FCA.
It would be possible to transform numbers by taking the lessons of automatic enrolment into workplace pensions and applying it to Pension Wise by automatically booking appointments for people rather than expecting them to book sessions for themselves.”
“If the FCA wants to make a meaningful difference, its top priority should be to get people into Pension Wise appointments earlier rather than at the point of wanting to take cash when they have usually made up their minds.
“One way to do that is to automatically book people onto appointments rather than leaving them to book the appointments themselves.
“The FCA is well aware of how inertia can be a force for good.
“So we would like to see it pick up the challenge and prove it has the imagination and confidence to address the problem.”
Pension Wise themselves urge savers to watch out for the following if an individual or company:
- Contacts them unexpectedly (known as a “cold call”) about their pension money by phone, text message, visiting them in person, or in other ways
- Says they can access their pension money before 55 and that they can help them with this
- Encourages them to take out a large lump sum, or their whole pension pot in one go, and to let them invest it for them
- Asks them to transfer their money quickly, even sending documents to them by courier
- Uses words like “pension liberation”, “loan”, “loophole”, “free pension review” or “one-off investment”
- Offers them an investment described as “unique”, “overseas”, “environmentally friendly”, “ethical” or in a “new” industry
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