Pension Freedom  

One in 10 targeted by scammers post pension freedoms

One in 10 targeted by scammers post pension freedoms

Nearly one in 10 of people aged 55-plus fear they have been targeted by suspected scammers since the introduction of pension freedoms, research from Prudential showed.

The provider's survey, which polled 1,000 individuals, found that 9 per cent of individuals have been approached about their pension funds by people they now believe to be scammers.

Offers to unlock or transfer funds are tactics commonly used to defraud people of their retirement savings, the provider said.

One in three (33 per cent) of those aged 55-plus said the risk of being defrauded of their savings is a major concern following pension freedoms, which was introduced in 2015.

Since then, the number of people transferring out of their defined benefit (DB) pension transfers has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution (DC) schemes.

According to figures from the Office for National Statistics (ONS), funds transferred out of pension schemes almost tripled to a record £34.2bn in 2017.

According to the research, nearly half (49 per cent) of those approached by potential fraudsters said they did not report their concerns because they did not know how to, or were unaware of who they could report the scammers to.

Most recent pension fraud data from Action Fraud, the national fraud and cybercrime reporting service, showed 991 cases have been reported since the launch of pension freedoms, involving losses of more than £22.687m.

Prudential's research concluded fewer than one in five (18 per cent) of those approached by suspected scammers had reported their fears to authorities.

Nearly half (47 per cent) said the approach involved offers to unlock pension funds or access money early, and 44 per cent said they involved transferring pensions.

About 28 per cent of those targeted by suspected fraudsters were offered alternative investments such as wine and 20 per cent said they were offered overseas investments, while 13 per cent say scammers had suggested investing in crypto-currencies.

Around 6 per cent believe they have been victims of frauds.

According to Vince Smith-Hughes, retirement income expert at Prudential, pension freedoms, though enormously popular with consumers, have created a potentially lucrative opportunity for fraudsters and people need to be vigilant to safeguard their hard-earned retirement savings.

He said: “If it sounds too good to be true then it usually is, and people should be sceptical of investments that are offering unusually high rates of return or which invest in unorthodox products which may be difficult to understand.

“If in any doubt, seeking independent advice from regulated professional advisers will help ensure they won’t get caught out.

“The Pensions Advisory Service, Financial Conduct Authority and The Pensions Regulator are doing good work raising awareness of the risks of scamming and by reporting suspected scams consumers can help the authorities tackle the issue and maintain confidence in pension freedoms.”

The government is working on introducing a cold calling ban, which could be implemented by June.