The official known figure of funds paid into pension scams stands at £495m, but many suspect it may be substantially higher, The Pensions Regulator said.
Last year, John Lawson, head of policy at Aviva, warned pension liberation was at least a £600m problem.
In an attempt to prevent others from being led into accessing their pension pot as a lump sum or loan before 55 without understanding tax penalties, or from being falsely led into moving their retirement savings into unregulated high-risk or bogus investments that could result in them losing their entire pot, victims have spoken out in a campaign launched by TPR.
According to reports, 18 websites have been suspended and arrests have been made during this campaign period.
A 49-year-old scam victim, who is potentially facing an £18,000 tax bill and risks losing her home after falling victim to a ‘pension loan’ scam said: “These scams target vulnerable people. I feel very angry that I have been misled. Ignore the sales patter, ignore the glossy websites, ignore the cold calls and text messages. Go to an independent financial adviser – speak to an expert.”
Another woman whose 40-year-old son took his own life after never receiving a promised £17,000 lump sum following the transfer of his £42,000 work pension, said: “I don’t want other mothers to suffer what I’ve been through, and what my family has been through.
“No matter how desperate things get, don’t be tempted to cash in your pension. Don’t do it - the people behind these scams are rogues who exploit people’s vulnerabilities.”
TPR has refreshed its ‘Scorpion’ campaign material to reinforce the risks to consumers of pension liberation scams, including a variety of methods such as cold calls, text message spam and website offers.
In a statement, TPR said: “Pension scams may sound legitimate but there is a high risk that once members release their funds in this way, their money will be moved into dubious investment arrangements, often overseas and unregulated.
“Home visits from ‘introducers’, offers of ‘free pension reviews’, claims about ‘legal loopholes’ and unusual investments like overseas property, storage units or biofuels are all used to fool members into thinking they’re being offered a legitimate pension transfer.”
Pensions minister Steve Webb said:“Although quick-fix pension release schemes may seem tempting, particularly when times are tough, people should make sure they understand all the implications before they sign on the dotted line.
“A joint industry and government operation is working to stamp out these unethical, exploitative, poor value offers - but I would urge anyone who is approached to think carefully, consider seeking advice and, if in doubt, steer clear.”
