Scammers target over £2 million in pension pots in the last five months

• We want those saving for their retirement to ‘flip the context’ when approached with pension offers, by imagining the same offer in person, in an everyday, offline setting like a trip to the shops or an afternoon in the pub
• Consumers are five times more likely to be interested in a free pension review offered online than in their local pub, despite this being a tell-tale sign of a scam
• We have teamed up with top psychologist, Dr Linda Papadopoulos, to highlight the most common pension scam tactics by putting them in everyday settings

Flipping the context

Our new research shows pension holders were nine times more likely to accept advice from someone online than they would from a stranger met in person. They are five times as likely to be interested in a free pension review from a stranger online than someone in their local pub.

The way people make decisions is naturally affected by their environment and scammers take advantage of this. We are urging anyone saving for retirement to ‘flip the context’ and imagine what they would do if they received pension advice from a stranger while enjoying a quiet pint in their local, or out shopping with friends.

Whether these approaches are made online or at the bar, free pension reviews, time-limited offers and help to release cash from a pension are all signs of a scam. ‘Flipping the context’ by putting these signs in an everyday, offline setting makes pension scams easier to spot and avoid.

Last orders at the bar

The research revealed that half (50%) of pension holders would be unlikely to make an ‘impulse buy’, with many retailers using time pressure as a tactic to push consumers into making a purchase. However, more than a third of pension holders (36%) were unable to recognise time-limited offers as a sign of a scam. Scammers will often try to tempt pension holders with time-limited offers that are too good to be true to pressure them into making a rash decision about their pension.

Dutch courage

Despite more than two thirds of pension holders (68%) claiming they were confident they could spot the signs of a pensions scam, the research found that this confidence may be misplaced. When quizzed, only around a quarter of pension holders (28%) realised that a free pension review was a sign of a scam, and just 40% knew to be wary of opportunities to transfer your pension.

This is particularly concerning, as over-confidence can lead to pension holders letting their guard down and failing to check any firm they deal with is on the FCA Warning List[1] – one of the best ways to make sure they avoid pension scams.

A total of £2,241,774 has been reportedly lost to pension scammers since the start of 2021 (January 2021-May 2021).  Some victims of pensions scams are reluctant to report that they have been scammed or do not realise they have been scammed until years later, so the total amount lost may be much higher.

The average loss this year was £50,949, according to complaints filed with Action Fraud. More than double last year’s average (£23,689). 

Scammers target pension pots big and small, with reported losses ranging from under £1,000 to as much as £500,000.

The research revealed that more than a quarter of pension holders (28%) felt more at risk of a pension scam now compared to before the coronavirus (Covid-19) pandemic. Of those who felt more at risk, nearly two thirds (65%) felt that scammer tactics had become more sophisticated and harder to spot during the pandemic. Tools like ‘flipping the context’ are becoming more important than ever for consumers to protect themselves against scammers.

Mark Steward, Executive Director of Enforcement and Market Oversight, 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.

'Fraudsters will seek out every opportunity to exploit innocent people, no matter how much they have saved.

'Check the status of a firm before making a financial decision about your pension by visiting the FCA register. Make sure you only get advice from a firm authorised by the FCA to provide advice, before making any changes to your pension arrangements.'

Dr Linda Papadopoulos, psychologist who is supporting the ScamSmart campaign said: 'Scammers will use behavioural tactics to trick you into a false sense of security. Often these criminals will manipulate and persuade you to do things in the moment, which ordinarily you would feel suspicious of in a more familiar setting, such as a shop or local pub.

'It is important when approached with a financial offer on your pension, to take yourself out of the context or pressure of that moment. We know that people wouldn’t accept a free financial product in a pub or would be unlikely to make a purchase in a random flash sale – so why risk it with your pension?'

Five common warning signs of a pension scam, according to the FCA, include: 

1. Being offered a free pension review out of the blue
2. Being offered guaranteed higher returns – claiming they can get you better returns on your pension savings
3. Offered to help to release cash from your pension, even though you’re under 55
4. High-pressure sales tactics – scammers may try to pressure you with ‘time-limited offers,’ or even send a courier to your door to wait while you sign documents
5. Unusual investments which tend to be unregulated and high risk

Pension savers can test how smart they are by taking a quiz[2]. Click here for more on how to avoid pension scams.

Notes to editors

1. Since the beginning of 2021, pension scam losses totalling £2,241,774 have been reported to Action Fraud. The true number of victims is likely to be higher as scams often go unreported and those affected may not realise they have been scammed for several years. Action Fraud reporting is a self-reporting tool; information provided within Action Fraud reports may not have been verified and may be subject to discrepancies.
2. All figures, unless otherwise stated, are from Censuswide, with 2000 Respondents aged 45-65 between 07.05.2021-12.05.2021. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.
3. The latest ScamSmart pension scams advertising campaign launched on 1 July. The advertising includes TV, radio, online video, and paid search.
4. The ScamSmart website gives consumers tips on how to spot the techniques used by fraudsters and hosts the FCA Warning List[1]. The Warning List is a list of firms and individuals that the FCA knows are operating without its authorisation.
5. A ban on pension cold calling came into force in 2019. Firms that break the rules could face penalties of up to half a million pounds.
6. The FCA has an objective of ensuring protection for consumers. Find out more information about the FCA[3].