Regulators warn public of pension scammer tactics as victims report losing an average of £91,000 in 2017

• The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) launch joint TV advertising campaign to raise awareness of pension scams and the most common tactics used by fraudsters
• New statistics show that pension scam victims lose an average of £91,000 each

The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have joined forces to urge the public to be on their guard when receiving unexpected offers about their pension and to check who they are dealing with. The two regulators have launched a new ScamSmart advertising campaign targeting pension holders aged 45-65, the group most at risk of pension scams. This comes as a new poll commissioned by the regulators reveals that almost a third (32%) of pension holders aged 45 to 65 would not know how to check whether they are speaking with a legitimate pensions adviser or provider.

Highly sophisticated scammers lure people into transferring their pensions into fraudulent schemes, stealing an average of £91,000 per victim. Victims of pension scams can lose their life savings, and be left facing retirement with limited income. 

The FCA and TPR are calling the public’s attention to the tactics used by pensions scammers. One of the most common tactics is to offer a ‘free pension review’. Research reveals that one in eight 45 to 65-year-olds surveyed (12%) said they would trust an offer of a ‘free pension review’ from someone claiming to be a pension advisor.

Cold calling is currently by far the most common method used to initiate pension fraud. Other scam tactics include: 

1. Unexpected contact about your pension via phone, post or email
2. Promises of guaranteed high returns and downplaying the risks
3. Offering unusual or overseas investments that aren’t regulated by the FCA e.g. overseas hotels, forestry, green energy schemes
4. Putting people under pressure to make a quick decision, for example with time-limited offers, and sending a courier round with paperwork to sign
5. Claiming to be able to unlock money from an individual’s pension (which is normally only possible from age 55)

It is believed that only a minority of pension scams are ever reported. The FCA and TPR are urging anyone who believes they may have been targeted to come forward.

Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said: “The size of individual pension pots makes pensions savings an attractive target for fraudsters. That’s why we’re urging anyone who is thinking about transferring their pension to check who they are dealing with and only use firms authorised by the FCA. Pension scams can cause victims significant harm – both financially and mentally. If you are ever in doubt about a pension offer, visit the ScamSmart website.”

Nicola Parish, Executive Director, TPR, said: “£91,000 is a huge amount of money for someone approaching their retirement to suddenly have ripped from their savings. If someone cold calls you about your pension, it’s probably an attempt to steal your savings. Our message is clear – hang up and report it.”

Guy Opperman, Minister for Pensions and Financial Inclusion, said: “Pension scams are devastating for hardworking people and can rob them of the retirement they planned. I would urge savers to always exercise caution and seek independent guidance or advice before making important financial decisions. Anyone looking for free, impartial guidance on pensions can visit Pension Wise or The Pensions Advisory Service.”

Dimitrios Tsivrikos, consumer and business psychologist, said: “Scammers are intelligent, ambitious and deceiving. They mimic the sales patter used by salesmen, building trust, a rapport and a relationship to infiltrate our psyches and influence our behaviour. That’s why I want everyone to remember that if it sounds too good to be true, then it probably is. So, put the phone down to unsolicited calls regarding your pension and stop a scammer from stealing your retirement.”

The FCA and TPR are urging the public to be ScamSmart with their pension and always check who they’re dealing with. The regulators recommend four simple steps to protect yourself from pension scams:

1. Reject unexpected pension offers whether made online, on social media or over the phone
2. Check who you’re dealing with before changing your pension arrangements – check the FCA Register[1] or call the FCA contact centre on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA
3. Don’t be rushed or pressured into making any decision about your pension
4. Consider getting impartial information and advice

If you think you’ve been a victim of a pension scam, report it. Visit www.fca.org.uk/scamsmart[2] to find out more.

The joint advertising campaign shows the contrast between the impact on the victims of pension scams and the lifestyles enjoyed at their expense by the criminals. Using TV, radio and social media adverts, it urges anyone who is contacted about their pension to visit ScamSmart before they transfer any funds, so that they don’t end up becoming the victim of a scammer.

FCA and TPR are part of Project Bloom a multi-agency taskforce which is working to combat pension scams. The taskforce includes the DWP, HM Treasury, the Serious Fraud Office, City of London Police, the National Fraud Intelligence Bureau, The Pensions Advisory Service, and the National Crime Agency.

Notes to editors:

1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,018 adults aged 45-65 with a pension. Fieldwork was undertaken between 20-23 July 2018. The survey was carried out online.
2. The new ScamSmart pension scams advertising launches on 14 August 2018. The advertising will include TV, radio, online video and banner ads, and paid search.
3. If people aged 50 or over do require free independent advice they can contact the government-backed Pension Wise service. To book a free appointment visit www.pensionwise.gov.uk/en[3].
4. The Treasury intends to lay regulations to ban pension cold calling in the autumn.
5. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority.
6. The FCA[4] has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
7. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).