At a time when the nation is pulling together to support each other, industry bodies have detected a significant increase in fraudulent activity, specifically pension scams, taking advantage of the COVID-19 crisis.
The Pensions Regulator (TPR), Financial Conduct Authority (FCA) and the Money and Pensions Service have raised concerns about the trend, and Action Fraud recorded a 400% increase in fraud reports linked to COVID-19 in the month of March alone.1
With many people under financial strain, facing uncertainty with their jobs, and perhaps having to rely on whatever savings they have, the scammers seem to be approaching from various angles.
These tactics range from ‘phishing’ - sending fraudulent communications that are disguised as coming from reputable sources - for sensitive financial information through email, to telephone calls to fraudulently trick victims into transferring money.
At Local Pensions Partnership (LPP), we’re warning our 600,000 pension scheme members of the increasing threat by helping them spot the early warning signs.
Seven tips to stay safe from financial fraud
Following these simple tips will help protect you and your loved ones from pensions scammers.
1. Reject ALL unexpected offers: Be wary of cold calls asking for your financial details - they are illegal.
2. Know who you are dealing with: Always take the time to double check, speak with family or friends and, most importantly, ensure you are dealing with an FCA-registered financial adviser. You can check their credentials in minutes at www.register.fca.org.uk
3. Check contact details carefully: Scammers have been known to ‘clone’ legitimate financial adviser websites to pass themselves off as the real thing. Always use the contact details on the FCA register
4. Don’t be pressured: ‘Time-limited’ offers or deals that sound too good to be true normally are. Your pension is one of your most valuable possessions and a professional financial adviser will never rush you into a decision.
5. Get impartial information: Your money is yours alone. Never allow someone to tell you what to do with it. There are free and impartial services such as the Pensions Advisory Service that can explain your options
6. Don’t waste your money on ‘Pension Liberation’ deals: The earliest you can access your pension benefits is from age 55, which is set by the government. Some organisations may promise you early access to your savings, but the costs are high and the impacts on your financial security are immeasurable. You can lose over 85% of your life savings with such arrangements. Don’t hand your life savings to someone else for short-term cash. It can cost you your future.
7. When in doubt, avoid and report: Any investment opportunity that sounds too good to be true, or offers you the ability to ‘access your pension early’, should be flagged with Action Fraud.
1Source: Action Fraud