Retirement

Flexible Pension Freedom Triggers Fraud Alert

Pension freedoms have triggered a flood of fraudsters cold-calling over 55s with dodgy investment opportunities, according to consumer watchdogs.

Thousands of over 55s have received telephone calls, texts and emails from suspected bogus IFAs offering high returns on risky investments, says the Consumers Association.

Shockingly, 40% of those contacted confess they have no idea how to spot a fraudster after their cash.

The research also revealed the scammers were ramping up cold calls to pension savers from the start of the year.

The figures show 40% of over 55s were contacted between January 1 and April 5 – twice the number of cases for last year.

Bogus advisers

Bogus advisers concentrate on four main selling ploys, says the watchdog:

  • Risky high-return investment pitches (21%)
  • Free pension reviews (16%)
  • Pension liberation offers to unlock retirement savings (13%)
  • Advice on accessing a pension for under 55s

The association warns that retirement savers should not hand over any money to cold-calling advisers.

“The number of calls about pensions is rising and has definitely increased since flexible access options came into force on April 6,” said a spokesman.

“Anyone contacted by telephone, email or letter about their pensions should carefully consider engaging with one of these advisers. In many cases, they are being tricked into a scam.”

Scam warning signals include advisers speaking about ‘one-off investment opportunities’, ‘free pension reviews’, ‘legal loopholes’, ‘a cash bonus’ or ‘government endorsement’.

Some advisers suggest sending money overseas, which could mean savers will lose track of their cash.

Fraud warnings signs

Savers should also look into the tax implications of taking money from a pension before the age of 55 years old.

Other fraud indicators include salespeople refusing to hand over paperwork or pressure to send money quickly.

“Pension reforms have given retirement savers more options about accessing and investing their money, but also made millions of pounds available to fraudsters because many people are not financially savvy,” said the spokesman.

“It is easy for someone to fall for the sales patter if they are not familiar with pension and investment rules and opportunities.”

The association suggests anyone contacted by a pensions adviser out of the blue should research the company.

Free help is available from The Pensions Advisory Service on 0300 123 1047, or Action Fraud on 0300 123 2040.

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