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Spot a pension scam

pension scam

Every few months, we seem to be presented with a new and devious pension scam. The frequency of these scams is alarming, and it leaves people with feelings of uncertainty and suspicion about pensions.

Moreover, if you are in a position wherein you are considering retirement and your pension options, such scams can have a significant impact. Falling victim to one could prove financially fatal.

If you have any uncertainty about any aspect of your pension or have been approached by someone offering advice on your pension, you should consult a regulated pension specialist. Knowing what to look out for is the best defence against unscrupulous pension scammers, and Portafina has issued six questions to ask yourself to spot a pension scam quickly:

Is the Company or ‘Advisor’ Legitimate?

If you are contacted by a company or individual offering you advice about your pension, the first thing you should do is confirm they are legitimate by checking with the FCA (Financial Conduct Authority). You can do this by visiting the FCA’s website and searching for the company or individual’s name and finding out if they are authorised.

You should only deal with advisors or companies that are FCA authorised. Once you have checked they are authorised, you can get back in touch with them via contact details from their company website. Do not merely return a call to a number someone gave you previously.

Are They Using Unfamiliar Language?

The language used in pensions and other financial products can be confusing and unfamiliar. Scammers will often use this to gain an advantage over you. Anything they say that you find confusing, get them to explain it again in more straightforward language. A genuine pension advisor should have no problems doing this. However, the scammer will struggle. 

Look out for these terms, commonly used to lure people into pension scams: 

  • Cashback
  • Limited-time offer
  • Loophole
  • One-off investment
  • Pension liberation

Are They Promising Guaranteed Returns?

Death and taxes are the only guarantees in life. Anyone promising you guaranteed returns on your pension investment should be treated with the utmost suspicion. Such a guarantee is a key indicator that you are dealing with a scammer.

You should always understand how your money is going to be invested. Don’t feel pressured into putting all of your pension money into a single investment or any that are particularly risky. You can seek more advice from Pension Wise or the Pensions Advisory Service.

Are They Offering You Early Access To Your Pension?

There are certain situations wherein you can have early access to your pension from the age of fifty-five. However, the circumstances are particular, and you would need to consult with an authorised advisor to explain your options on this.

If you decide to transfer your pension to a company offering early access to your pension, you should be conscious of the potential tax implications. Worse still, you could lose the lot if you are dealing with a scammer.

Are They Putting You Under Pressure?

If you feel you are being put under pressure to make a quick decision regarding your pension, you are likely dealing with a scammer. Even if they are not a scammer, making a hasty decision about your pension can have devastating effects on your future. Decisions about your pension are significant and taking time to look into the complications and intricacies is essential.

Have They Called Out Of The Blue?

As of 9th January 2019, anyone who calls you out-of-the-blue to discuss your pension could be fined up to £500,000. However, making pension cold-calls illegal will not stop a scammer’s devious methods.

If you are cold-called about your pension, you should immediately be suspicious, regardless of who is calling you, even your existing pension company. You can hang up the call if you wish and report the caller to the ICO.

To help identify the cold caller, try to get the following information from them:

  • Their FCA number.
  • Phone number to call back.
  • The length of time they’ve been an advisor.

This information is standard, so the advisor or company should have no objections to you asking.

Hopefully, asking these six questions will help protect you from pension scams.

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Posted by: Sarah Dixon | Posted on: December 24, 2020 | Posted in: MAMA

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