Beware the fraudsters after your pensions and investments

What you’ll learn:

• How fraud is claiming more victims
• Ways scammers try to steal your pensions and investments
• How to report fraud.

Fraud is rife nowadays with criminals working hard to steal our money.

Many are focused on getting victims to part with their pensions and investments.

Low interest rates, pension freedoms (being allowed to withdraw our pension savings from the age of 55) and the increasing amount of time we all spend online have contributed to an unfortunate rise in theft.

While fraudsters often prey on vulnerable groups, absolutely anyone can fall victim to a cleverly executed scam.

Here we look at the facts and the figures, and the warning signs to help keep your hard-earned pensions and investments safe.

Pension fraud

Pension scam victims are now losing over £50,000 on average – more than double the typical figure reported in 2020.

Complaint data showed that the average loss this year so far has been £50,949, compared with £23,689 last year.

Losses in individual cases ranged from less than £1,000 to as much as an eye-watering £500,000. Yet the real figures could be higher because so many scams go unreported.

The financial watchdog, the Financial Conduct Authority (FCA), launched an awareness campaign, urging anyone saving for retirement to be on their guard for unsolicited approaches via email to avoid failing victim¹.

It has urged savers to "flip the context" if they are approached online with tempting offers.

This means imagining how you would react if the same offer was made to you by a stranger in a pub, for instance.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said: “Imagine a stranger in a pub offering free pension advice and then telling you to put those savings into something they were selling. It is difficult imagining anyone saying yes to that.

“It’s no different online. Whether you’re on social media or checking your emails, if someone offers you free pension advice, ‘flip the context’ and imagine them doing the same thing in real life. Stop and think how you would react.

“Fraudsters will seek out every opportunity to exploit innocent people, no matter how much they have saved.”

According to the FCA research², just 1.1% of pension holders would take advice from a stranger, but 10% would accept financial advice online.

They would also be five times as likely to be interested in a free pension review from an online stranger than someone in their local pub¹.

A common scam is where you would be approached by someone purporting to be an investment specialist, offering their services to review your pension arrangements.

Their aim is to sell you the idea of an investment that would see the value of your savings soar – but in fact no such investment would exist, and they would disappear with your life savings.

Beware of anyone that tries to persuade you into moving cash anywhere. Especially if they are offering unsolicited advice. Always speak to an independent financial adviser before making changes to your pension and check the FCA website for advice on possible cloned companies.

Investment fraud

Criminals are also hot on attracting investors. Fraudsters present professional and credible looking online adverts, send emails, and create websites to advertise fake investment opportunities in cryptocurrency, foreign exchange trading and bonds.

Over £63million³ was lost by victims of investment fraud during the 12 months between April 2020 and March 2021 who referred to a social media platform in their report to Action Fraud, the national reporting centre for fraud and cyber crime.

Younger investors using social media are increasingly at risk of falling victim.

A recent study⁴ showed that under 35s are twice as likely to get caught out than over 55s. And while the elderly are more vulnerable to over-the-phone scams, the younger generation is falling for social media and online scams.

The FCA has previously found⁵ that those under the age of 25 were six times more likely to trust an online investment offer made via social media than people aged above 55.

Staying safe

It’s crucial to only deal with companies authorised by the FCA. You can check authorised companies by calling 0800 111 6768 or online at fca.org.uk/register.

The FCA has a website to help savers spot scams at scamsmart.fca.org.uk.

Here are five common warning signs for someone wanting to steal your pensions or to set up a scam investment:

1. Being offered a free pension review out of the blue.
2. Being offered guaranteed higher returns - people who claim they can get you better returns on your savings.
3. Being offered help to release cash from your pension, even though you are under 55.
4. High-pressure sales tactics - scammers may try to pressure you with "time-limited offers" or send a courier to your door to wait while you sign documents.
5. Unusual investments which tend to be unregulated and high-risk.

It’s not just your pensions and investments at risk, of course. Fraudsters will do anything they can to steal your personal details and money.

Here’s our guide on how to avoid scams and what to do if you’re a victim.