Pension savers are almost three times more likely to be approached to review their pension or release some of it as cash than they were nine months ago, due to the upcoming Budget at-retirement reforms.
Research carried out by Opinium Research, on behalf of closed life fund consolidator Phoenix Group via 2,004 online interviews, found 45 per cent of pension savers yet to retire have been contacted, either through unsolicited calls or messages sent via email or text.
Of those targeted by potential scammers, 11 per cent considered contacting them and 15 per cent said they had contacted the fraudsters as a result.
This figure increases to 19 per cent of 18 to 34-year-olds and 18 per cent of 35 to 54-year-olds, while 12 per cent of the former group have already released some or all of their pension as cash as a result of being contacted.
Of those who do want to release money from their pension pot, 29 per cent indicated they would consult an IFA, but 46 per cent said they would only seek advice from family and friends.
Parminder Dhothar, intelligence and investigations manager for Phoenix Group, said the increase in aggressive targeting by pension scammers in the last nine months is very concerning, warning the fees to ‘liberate’ your pension can be as high as 30 per cent.
Typically, pension liberation arrangements involve transferring savings from an existing scheme to another to allow early access to funds.
Clients will often in reality be offered a loan from the transferring company, which will take a fee or deduct the sum plus significant interest from the pension pot when the client reaches 55.
Aside from exceptional circumstances, such ‘early’ access is not allowed and will incur a tax penalty of 55 per cent, plus potential charges from the regulator that can take the penalty to 70 per cent.
HMRC previously told FTAdviser that investors should stay “well away” from pension offers that claim to be able to provide loans or release tax-free cash from people’s pension pots before they reach age 55.
Ms Dhothar said: “Anyone thinking of benefiting from the changes should do some thorough research and not simply respond to a text message or cold call.”
Phoenix has so far prevented 1,074 people from losing a total of £22.3m in potential pensions fraud and expects to see more cases come in whilst these marketing practices continue to be used.
At the end of December, Standard Life stated that it had blocked around 400 suspicious transfers, totalling almost £14m, with 18 such transfers blocked in the last month alone.
Earlier that month, the Financial Conduct Authority warned consumers of unauthorised firms using the new pension freedoms to get people to transfer their pensions out for proposed better returns.
More recently, the Pensions Advisory Service and the Association of British Insurers launched a collaborative social media campaign to help raise consumer awareness about the risks and consequences of pension scams.
peter.walker@ft.com
