Scammers can make up to 22 years of retirement money vanish within hours if savers fall for their bluster.
The average pension scam nets crooks £82,000, which regulators calculate takes regularly setting aside money from earnings over the 22 years.
But most savers ignore the risk and make a decision to follow advice from a scammer within 24 hours of an offer being made to them.
Officials at The Pension Regulator (TPR) and Financial Conduct Authority (FCA) say few savers spot the tell-tale signs of a scam.
Savers with degree most likely to fall prey
Although two out of three savers say they are confident enough to spot a fraudster, the same number would accept financial advice from someone contacting them out of the blue, which the regulators point out is the number one warning signal of scammers.
Surprisingly, those most likely to fall for a bogus pension offer are better educated savers.
Retirement savers with a university degree are 40% more likely to accept a free pension review, even though this is almost certainly a sign of a fraudster at work, and they are 21% more likely to agree to take up an offer of early access to pension savings, another indication of a likely scam.
Early access means withdrawing pension savings from the age of 55 years old.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “We know many people have big plans for their retirement, whether it’s seeing new places, learning new skills or helping their families out financially.
Scammers destroy dreams
“Pension scammers destroy those dreams, often forever. Reject unsolicited approaches offering ‘help’ with your pension and get advice from an FCA authorised firm before making big changes to your pension fund. Make sure your lifetime savings stay yours.”
The regulators asked a behavioural psychologist for advice about how to spot a scammer.
“Scammers employ clever techniques, such as seeking to establish ‘social similarity’ by faking empathy and a friendly rapport with their victims,” said Honey Langcaster-James.
“They can win your trust in a short space of time and by engaging with them you leave yourself vulnerable to losing a lot of money very quickly. People need to know how to spot the signs of a scam so they don’t fall for psychological tricks.”