A total of £2.2m has been lost to pension scams in the first five months of 2021, with the regulator warning savers are nine times more likely to accept ‘advice’ from someone online than a stranger in person.
Research from the Financial Conduct Authority, published this morning (July 7), found savers are significantly more likely to be fooled by scammers' tactics online than they would face to face.
The average loss to pension scams this year was £50,949, according to complaints filed with Action Fraud - more than double last year’s average of £23,689.
Scammers targeted pension pots big and small, with reported losses ranging from under £1,000 to as much as £500,000.
The regulator found pension holders were nine times more likely to accept advice from someone online than a stranger they met in person and five times more likely to be drawn in by a free pension review from a stranger online than someone in their local pub.
In response to this the regulator revamped its scams campaign urging savers to “flip the context”.
It said imagining receiving the same approach about their pensions online as while enjoying a quiet pint in their local pub would make scams easier to spot.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “Imagine a stranger in a pub offering free pension advice and then telling you to put those savings into something they were selling. It is difficult imagining anyone saying yes to that.
“It’s no different online. Whether you’re on social media or checking your emails, if someone offers you free pension advice, ‘flip the context’ and imagine them doing the same thing in real life. Stop and think how you would react."
The FCA found half of pension savers would be unlikely to make an ‘impulse buy’ in general but despite this, more than a third (36 per cent) were unable to recognise time-limited offers as a sign of a pension scam.
More than two thirds of savers (68 per cent) claimed they were confident they could spot the signs of a pensions scam, but the FCA found this confidence may be misplaced.
When quizzed, only around a quarter (28 per cent) realised that a free pension review was a sign of a scam, and just 40 per cent knew to be wary of opportunities to transfer a pension.
The regulator said this was particularly concerning, as over-confidence can lead to savers letting their guard down and failing to check any firm they deal with is on the FCA warning list.
Covid has also played a role as more than a quarter of savers now feel more at risk of falling for a pension scam than before the pandemic.
Of those who felt more at risk, nearly two thirds (65 per cent) felt that scam tactics had become more sophisticated and harder to spot during the pandemic.