PENSION savers are being warned about scammers using the cost-of-living crisis to con people out of their life savings.
Older people risk being lured by offers to access pension savings early to beat the financial squeeze, or fake investment schemes claiming to give attractive returns.
Nicola Parish, a director at The Pensions Regulator, said: “The cost-of-living crisis is impacting pension savers and there is a risk that scammers will take advantage of this uncertainty.
“Fraudsters may promise higher returns or help to release cash from your pension early to pay essential bills, but in reality they just want to steal your money.
“Once it’s gone, it’s almost impossible to get it back.”
More than £2million has been lost to pension fraud since the beginning of 2021, according to the latest figures from Action Fraud.
Victims lost an average of £75,000, while men over the age of 50 are most likely to be targeted.
Here we reveal six of the most common pension scams to watch out for, and explain how to guard against them.
YOU ARE OFFERED A PENSION REVIEW
THIS is one of the most common types of pension scam.
You might spot a website pop-up or receive a call, text or email offering a free pension review.
If you agree to the service, you may get a call or home visit from someone claiming to be a financial adviser. They will recommend you shift your money into another pension scheme, or to investments that simply don’t exist.
You probably will not see your pension again. A legit company would never contact you out of the blue to offer a pension review.
YOU ARE OFFERED A HIGH-RATE INVESTMENT
INTEREST rates for savers remain poor, and the stock market has been plummeting.
This is an ideal scenario for scammers trying to tempt pensioners with investments offering great returns.
Scammers might impersonate a well-known pension provider to lure victims, or create a fake scheme.
A recent example is the fake Gresham Investment Pension Scheme, which Stephen Grimes, above, fell victim to.
Alan Barratt, 62, and Susan Dalton, 66, were jailed in April for conning hundreds of people into shifting more than £13million of pension savings to the Gresham Investment Pension Scheme.
Barratt was sentenced to five years and seven months. Dalton got four years and eight months.
David Austin, the scam’s mastermind, killed himself in 2019.
YOU ARE TOLD YOU CAN ACCESS PENSION EARLY
YOU are contacted by a crook saying you can access your pension before the age of 55.
They will probably try to convince you to shift funds into a different pension scheme offering better returns.
You could lose your money — and face a hefty tax charge for accessing retirement savings early.
Remember, you can only access a pension before 55 in specific circumstances, such as a terminal illness.
YOU ARE OFFERED HELP TO TRACE A LOST PENSION
MOST of us have several jobs during our lifetime and may have pensions we lose track of, which is an opportunity for scammers.
Be on your guard if you are contacted out of nowhere offering help tracing a lost pension.
The scammer will request your bank details along with other personal information, or ask for payment to find your old account.
YOU ARE ASKED TO SIGN PAPERWORK URGENTLY
YOU receive paperwork that needs signing but you know nothing about it. It is likely you will be told you must sign within a short timeframe. This should set alarm bells ringing.
Paul Pisano, UK financial crime director at Aviva, says: “Fraudsters will often try to add time pressure and they may claim to be a firm that you have a pension with.”
By completing the paperwork, you give the fraudsters personal information.
Letters may appear to be from trusted companies such as banks, or government bodies such as HMRC or the Department for Work & Pensions.
YOU ARE TOLD TO BUY A PARTICULAR ANNUITY
AN annuity is a pension product that provides a guaranteed income for the rest of your life.
Scammers often target unsuspecting older savers with poor health, promising a cash incentive or bonus to buy a particular annuity.
They often claim the particular product will only be on the market for a day, and may set up the annuity so any money left remains with them instead of beneficiaries.
‘Everything looked so professional’
STEVE GRIMES lost £27,000 after he was tricked into moving his pensions to a fake investment scheme.
He received a call from a man offering a cash incentive and a better return if he shifted two frozen pensions to the Gresham Investment Pension Scheme.
“I don’t know how they got my details but they offered me a £4,000 cash incentive,” says Steve, 59, a business development manager from Exeter.
At the time, he had frozen pensions with Axa Life and Royal London built up over 12 years at work.
Steve – married to Hayley, 56, who runs a cleaning business – says: “They were doing nothing, so I thought I could get the cash and let them invest it.
“I filled in forms and sent them to what I thought was an administration team.
“I even chose a ‘mid-risk investment’ option. All the letters and information looked professional and I was kept in the loop right up until my money was transferred.”
That was in February 2013. He learned months later he had been the target of sophisticated fraudsters.
He says: “I made a big mistake not getting a regulated adviser to help.
“I still have my house and some savings but it feels like the scammers stole my future.”
‘I considered myself pretty foolproof’
MARTIN CUMMINS, 78, narrowly escaped a scammer trying to con him out of his retirement savings.
The retired design engineer, who is from Dunstable, Beds, admits: “I always consider myself pretty foolproof but I was taken in hook, line and sinker at first.”
Martin tops up his state pension with income from an £82,000 Aviva fixed-rate investment bond.
He says: “I searched online to see if I could improve my returns and came across a pop-up ad offering me information on the best investments.”
He provided his details and was called by a man claiming to be from Aviva, who offered him a fixed-rate bond paying 2.2 per cent.
Martin sent photos of his passport, a bank statement and utility bill as requested, but crossed out some of his personal information.
He was then told to send his passport, and that someone would collect the cash in person, which raised suspicions.
“I called the number on my Aviva statement and was told I’d been targeted by scammers,” he says. “I didn’t hand over any money.”
How to avoid being conned
IF someone contacts you offering a pension review, hang up right away.
Paul Pisano of The Pension Regulator says: “Scams usually begin with unsolicited contact. Be very wary of anyone contacting you that you don’t recognise.”
– IGNORE unexpected pension offers made online, via social media or over the phone. A legit provider will not contact you out of the blue.
-DON’T accept offers to help trace lost pensions. Go to the Government’s official Pension Tracing Service at gov.uk/find-pension-contact-details.
– CHECK who you are dealing with. Search the Finanical Conduct Authority Register at fca.org.uk or call its contact centre on 0800 111 6768 to see if a firm is authorised.
– DON’T let anyone pressure you into making a decision about your pension. Established firms will not give you a short deadline to sign something.
– BEWARE of jargon. Scammers often use phrases like “pension liberation” and “cash advance” to con you into parting with your savings.
– DON’T take pension advice from strangers. If you are over 50, seek trustworthy guidance from the Government’s free Pension Wise service at bit.ly/3O6EaqL. If you want tailored, personal advice, find a regulated financial adviser at vouchedfor.co.uk.
– NEVER click on links to websites and social media ads offering pension advice or an investment opportunity without checking up on them.
– IF you are unsure, contact your pension provider and ask for confirmation that what you are being told is valid.
– SEE the FCA’s ScamSmart website for more guidance on avoiding pension scams.
IF you are worried you may be the target of a scammer, you can report it to the FCA.
If you believe you have been scammed, contact Action Fraud immediately.
You can call on 0300 123 2040 or make a report on its website.
‘Debt collectors chasing me for a mystery £1,480 unpaid bill’
Q) I’VE received letters from the Department for Work & Pensions claiming I owe £1,480, and notices from debt collectors too.
No explanation has been given for why I have this mystery bill. I see you previously helped a reader in a similar position to me. Can you help me get to the bottom of what’s happened?
Laura Henshaw, Wandsworth, South London
A) You were horrified when you came back from a trip to Canada to find these scary letters piling up on your door mat.
You had no idea why you owed the money, and discovered the DWP had also contacted your employer to deduct the money from your wages.
Luckily, you had recently left this job so your pay wasn’t docked. But it meant the DWP handed your case over to debt collectors, who chased you with collection notices.
Panicking, you said you rang the DWP numerous times to sort it out, but you struggled to get through. You then rang the debt collectors, who said you owed money linked to a Universal Credit claim. But you said you’ve never been on benefits.
You came to me because you saw I had previously helped a reader in a similar situation. He got a mysterious £1,250 Universal Credit bill after crooks made a false claim in his name.
I suspected you too had been the victim of identity fraud, so I asked the DWP to investigate.
It looked into your case and confirmed a false claim had been made for Universal Credit advance payments.
This is when claimants can apply for an emergency loan to help them get through the five-week wait for their first Universal Credit payment.
Scammers applied for the benefit under your name, requested this loan and never paid it back.
A DWP spokesman said: “We have confirmed that Laura’s case is one of identity fraud and have written to inform her that she will not repay any debt associated with this.”
You said: “I am so grateful Lucy resolved this and helped ease my anxiety.”
Unfortunately, I suspect many others will be in the same situation as you.
Rules for making new Universal Credit claims were relaxed during Covid, but that meant criminals could make false claims more easily without being detected.
I am glad a weight has been lifted off your shoulders.
5 minute makeover: Cut costs on your phone
SLASHING your mobile bill can save you hundreds of pounds a year.
Holly Mead explains how to cut your costs now.
GO SIM-ONLY: If you are on a pay- monthly contract, make sure you are not handing over too much.
Once you have paid for the handset, you can move to a SIM-only contract.
These charge only for texts, calls and data – not the phone – so are much cheaper.
Catherine Hiley, telecoms expert at Uswitch, said: “These deals start from around £3.95 a month and often have no contract attached.”
GET A REFURB: Desperate to get a new phone? A refurb is a nearly new device that has been sold back to the retailer or manufacturer.
They must be of a certain standard to be resold, so it is less risky than buying a second-hand phone directly from another person.
When we checked, you could buy a refurbished iPhone 11 64GB for £269 from GiffGaff, compared to £429 for a new one from Argos.
CHECK YOUR PACKAGE: Many people overestimate how much data they use and end up paying too much.
James Daley, of consumer group Fairer Finance, said: “It’s not uncommon these days for people to spend as much as £50 a month on their mobile phone bills. That’s £600 a year.”
Check exactly how many calls and texts you are using each month by looking at your bill.
If you are under your allowance, it is worth downgrading the package.
ROAM WITH CARE: A number of providers have started introducing roaming fees.
That means you could easily rack up a big bill if you are heading abroad.
Check your phone firm to see its policy. You may be able to buy a roaming package up front to cut costs.
Sky Mobile has a Roaming Passport Plus, for example, that lets you use your UK data, calls and texts plan for 24 hours for £2.
You could buy a separate SIM card to use abroad, too.
Catherine said: “Alternatively, get a no-contract, SIM-only deal with a company that offers free roaming, like O2.”
Bear in mind that charges will vary depending on which country you are in.
GET HELP: If you claim Universal Credit or certain other benefits, you could get extra help with your bill.
Vodafone’s VOXI network has expanded its social tariff.
These are deals available to financially vulnerable customers and are considerably cheaper than the standard tariffs.
Catherine added: “Contact your provider.
“It should be able to help either by switching you to a cheaper deal or arranging a manageable payment plan.”