The UK’s Financial Conduct Authority (FCA) said on Wednesday that a total of £2.2 million was reportedly lost to pension scammers in the first five months of 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,” said the FCA.
“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 FCA has issued new advice to help avoid scammers.
Phoenix Group Holdings plc, the closed life and pension fund consolidator that owns the “old” Edinburgh-based Standard Life Assurance, said it is important that people are aware of the latest scam tactics outlined in the FCA advice.
Tommy Burns, Risk and Financial Crime Manager at Phoenix Group, said: “The FCA’s recent figures showing over £2 million has been lost to pension scams in the last five months are shocking, especially as it’s people’s life savings that are being targeted.
“It’s therefore really important that people are aware of the latest scam tactics.
“Pension scammers target pension pots of all sizes, relying on deception, and scammers can be articulate and financially knowledgeable, with authentic looking websites, customer testimonials and advertising that looks genuine.
“Scammers will design attractive offers to lure you in; downplaying the risks to your money to try and persuade you to transfer your pension pot to them or to release funds from it.
“For example, offers of unrealistically high financial returns or free pension reviews are often too good to be true, and we would urge anyone that’s being lured by these sorts of promises to check out their credibility before acting further.
“Taking the time to check that a website is secure before sharing personal details, inspecting the URL, or simply asking whether a deal sounds realistic could stop you being a scammed, and save you a lot of money and heartache too.”
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.
“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, a psychologist who is supporting the FCA, 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?”