Who is most at risk from pension scams? And what can be done about it? FTAdviser caught up with Helen Morrissey (pictured), pensions specialist for Royal London, as part of our focus on client vulnerabilities.
FTAdviser: We know pension scams exist, but how bad is the situation?
Helen Morrissey: I think the situation is far worse than we credit. During the [Work and Pensions Committee's hearing on January 6 as part of its inquiry into pension freedoms and protecting pension savers] the figures reported were quite scary. Roughly 30,000 websites have been taken down, and 545 scams reported last year to law enforcement... but we need to understand that while some are reported, much is under-reported.
FTA: Why is that?
HM: There is a lot of shame associated with scam activity and we underestimate the effect of this. People feel like they have lost their money not because someone has swindled them, but because they feel they have been stupid. The numbers of scams are high and the amount lost is in the millions, but I think this is only a portion of what is actually going on out there.
FTA: Has Covid-19 given more bandwidth to scammers?
HM: Scammers are such shape-shifters. They evolve so quickly depending on the situation. I remember when pension freedoms were announced [in 2015], I was only in my 30s. And within a week of the freedoms, I was getting text messages asking if I wanted to access my pension early. Scams evolve so quickly and they have with Covid, as well.
For example, some people have been bombarded with text messages for Covid tests that they paid for but never arrived and now, with people concerned about their financial futures, scammers are exploiting that, too. It might not have got worse, but shows how quickly these scams evolve.
FTA: Has loneliness been a factor?
HM: These fraudsters really work to get people's confidence. They come across as the victim's friend and people don't want to be rude. People have to be encouraged to put the phone down and stop the conversation. Everybody is vulnerable to it, and they need to be aware.
The pandemic has probably exacerbated it, but it has always been a factor. Royal London did work a couple of years ago showing that these scammers have almost turned these elderly people against their families. Fraudsters jump into that 'gap' whereby elderly people might live far away from their families and prey on that.
A lot of people who are elderly are very trusting and can be manipulated in this way. Many of them are unaware that such things exist. Because I work in this industry I know whether voice mails are scams but if someone left messages [pretending to be from HM Revenue & Customs, for example] on my mum's phone, she would be scared.