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Scams are getting more complex and harder to spot. But apparently, we still struggle to spot some of the most obvious scams and are putting our life savings at risk.

Three steps to avoiding pension scams

Scams are getting more complex and harder to spot. But apparently, we still struggle to spot some of the most obvious scams and are putting our life savings at risk.

To understand how people react when presented to potential scams, the Pensions and Lifetime Savings Association (PLSA) gave a test to thousands of members of the public.

Each one was given a variety of scenarios and asked to identify which ones they would describe as scams. Nearly one in three fell for the most basic tricks.

When you’re talking about the money supposed to see you through retirement, this is a very serious problem. So here are three simple steps to help you spot, avoid and report potential scams.

1. Spot

You might think scams evolve so quickly that it’s basically impossible to spot them. But regardless of how complex the scam is, the tell-tale signs remain the same:

  • Being contacted out of the blue by phone, text message, email or in person
  • Pressured into making a quick decision
  • Encouraged to transfer money quickly
  • Told they know of tax loopholes, or promise extra tax savings
  • Promising high rates of return with minimal risk

If you spot any of these signs, it could be a scam.

You should also beware of anyone claiming you can unlock your pension before the age of 55. This is sometimes called pension unlocking, or pension liberation. Only in very rare cases can you do this and you will likely be hit with substantial charges, a massive tax bill and see your remaining pension savings in high-risk investments. 

2. Avoid

So now you know how what to look out for, how can you avoid becoming a victim of a scam?

  1. Reject any unsolicited contact. Legitimate companies will not cold call you, or get in touch without you asking them to.
  2. Check the name of the company against the FCA register. If they’re not on the register, they’re not a legitimate company. You should also check the FCA warning list.
  3. If you’re thinking about an opportunity, seek independent advice from an FCA regulated firm.

3. Report

If you’ve been targeted, or think you’ve been targeted, it’s vital you report it as soon as possible.

The worst-case scenario is if you’ve already signed something or agreed to transfer some money. If this happens contact your pension provider straight away.

If you want to report a potential scam, you can use the FCA reporting form, or if you’ve lost money to a scam, report it to ActionFraud.

Beware of follow ups

If you’ve fallen victim to a scam, you need to be careful you don’t fall victim to follow up scams.

Companies might try to take advantage of your misfortune and target you again, claiming they’re able to get your money back.

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