A March survey of over 4,000 adults from LV found one in seven (14 per cent) had received unsolicited contact in the form of phone calls, emails, texts or house calls from someone other than their pension provider or financial adviser.
But the research found it was more common for mass affluent consumers to have been targeted in this way, at 24 per cent.
Stephen Lowe, group communications director at Just, said: “There is a huge volume of scam activity and fraudsters are becoming increasingly sophisticated in who they target and how they attempt to deceive them.
“FCA data demonstrates that the billions of pounds in retirement funds held by Baby Boomers are particularly rich pickings and it seems that those with the biggest pensions are being targeted.
“Unfortunately, many people are ill-equipped to spot a scam having had little engagement with their pension over the years and the system isn’t helping them.”
It comes after a survey by the Financial Conduct Authority found one in five adults (22 per cent) said they definitely received more unsolicited approaches about investments, pensions or retirement planning between March and October 2020, compared with before the pandemic.
The sad reality is that every email, letter or phone call should be treated as a potential scam, and every request to take action should be queried.Paul FazackerleyMeanwhile, the research from LV found 47 per cent of people felt that pension scams were hard to spot, and 27 per cent were worried they might fall victim to a pension scam.
Two in five people (38 per cent) said they wished they knew more about how to identify or prevent pension scams.
Clive Bolton, managing director of savings and retirement at LV, said: “One of the best ways to prevent pension fraud when considering transferring a pension or withdrawing money at retirement is to speak to a qualified financial adviser.
“Pensions freedoms allow people to do whatever they want with their pension from the age of 55 and that makes them a tempting target for fraudsters offering investments that could be entirely fraudulent, completely unregulated or extremely risky for ordinary investors.
“It’s hard for a layperson to spot these products but an independent financial adviser will be well placed to act in their client’s best interest and choose the retirement products most suitable for them.”
Paul Fazackerley, independent financial adviser at Furnley House, agreed that advisers played an important role in preventing scams.
Fazackerley said: “The sad reality is that every email, letter or phone call should be treated as a potential scam, and every request to take action should be queried.
“Whilst it is not the role of a financial adviser to oversee every transaction their clients make, having an open door policy, whereby a client can call with a concern is good practice.
“It is where the client gets added value from working with a good financial adviser and from an industry perspective, it plays an invaluable role in breaking down the chains of financial crime.”
Indeed Piers Mepsted, managing director and independent financial adviser at Financial Advice Centre, said: “The ‘mass affluent’ demographic are by definition more likely to seek advice or are taking advice with regard to their finances, and to this end we have seen an increased number of enquiries from both existing and new clients seeking either clarification or advice on the information they have received.”
Although LV's research found three in five (59 per cent) said they were aware of regulatory bodies including the Financial Conduct Authority, knowledge of how to report a pension scam was much lower, at 32 per cent.
In August the Financial Conduct Authority and The Pensions Regulator said over £30m had been lost to pension scammers since 2017 according to complaints filed with Action Fraud.
But in a Work and Pensions Committee session in January, Mark Steward, executive director of enforcement and market oversight at the Financial Conduct Authority, described the figure as an “underestimation”.
Face to face vs. remote financial advice
The research from LV also found that half (53 per cent) of UK adults who were open to financial advice would be comfortable with receiving advice online via instant chat.
But face-to-face communication remained the most popular way among four in five adults (82 per cent) who were open to financial advice.
LV’s Bolton said: “Financial advisers tell us that Zoom and telephone consultations can work well with existing clients with whom they have established a strong relationship.
“Delivering advice through online chat is an option but consumers are likely to want a strong relationship with an adviser they trust for this to be more mainstream.”
chloe.cheung@ft.com
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