Anyone can find themselves the victim of a pension scam and scammers are using particularly luring tactics to convince savers to hand over their money. Scammers can seem knowledgeable with credible testimonials and professional materials that are hard to distinguish from the real things.
Being aware of the warning signs can protect you and your finances from ruin, these include:
- Cold calls, text messages or contact out of the blue with promises of quick cash, legal loopholes and pension loans
- Claims of accessing your pension before age 55
- Promises of high or guaranteed returns
- Free pension reviews
- Transfers of your money overseas
Many of the investments that scammers offer are unusual, high-risk investments such as forestry and parking lots which might ring alarm bells, but some could sound more appealing such as renewable energy bonds and overseas property. Regardless of the investment, all scams pose a threat.
If you transfer and access your pension before age 55, you will face significant tax penalties of up to 55% of the value of your pension. This means you may end up receiving very little or none of your original investment and you could end up owing HMRC money as well.
It is very difficult to get your money back, and you run the real danger of losing a significant amount, if not all your pension savings. This could mean the difference between a retirement you have planned for years or effectively losing all your retirement income and having to work much longer than anticipated or rely on other sources of income.
Know the Facts
All pension savers should speak to an independent FCA-authorised adviser before making any transfers with their pension. Do not give out your personal or financial details and be sure to carefully check the legitimacy of company you intend to work with. Take your time to make all the checks you need, don’t be rushed into making a decision. The Financial Conduct Authority (FCA) is the professional body which regulates firms and individuals that provide financial advice meaning it can provide details of authorised advisors.
For more information on scams visit https://www.nespf.org.uk/resources/pension-scams/