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Steer clear of pension scams

Steer clear of pension scams

Category: Pensions

Updated: 23/03/2015
First Published: 23/03/2015

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The dawn of the new pension reforms is looming on the horizon, but while the changes herald new freedoms in the pension landscape, there is also an increased risk of scams.

Be aware

When the reforms are launched on 6 April, a whole host of new opportunities will open up to those approaching retirement. However, it pays to be cautious when exploring different options and to steer clear of deals that sound too good to be true - you may have the freedom to access your cash as you see fit, but that makes it even more important to be on your guard.

To help consumers avoid becoming the victim of a scam that deprives them of their hard-earned pension savings, the Financial Conduct Authority (FCA) has launched the next wave of its ScamSmart campaign. This campaign aims to alert consumers about dodgy deals and gives tips on how to identify scammers.

The top tip is to reject cold calls. This is a prime tool for scammers, so it is best to avoid a discussion about an investment opportunity from an unknown cold caller.

If you have been contacted and you are tempted by the offer, it's a good idea to check out the FCA Warning List. This list helps you to identify potential scams by highlighting companies that are best avoided if you are thinking about investing.

If you are still unsure about whether an offer is legitimate or not, consult an independent adviser. They will soon be able to identify whether the offer is a good one for your funds.

"Our ScamSmart campaign sets out the straightforward steps people can take to protect themselves, and number one is if you get cold called about an investment opportunity, hang up," explained Martin Wheatley, chief executive of the FCA. "Any decision about your retirement is important; start off on the strongest footing by being ScamSmart."

Lack of trust

To ensure that your money works as hard as you have done, it is best to weigh up all of your options carefully - even the legitimate ones. Sadly, however, it seems as though many of those approaching retirement are thinking about jumping on the bandwagon of lump sum withdrawal due to fears that the option may be short-lived.

According to research by MGM Advantage, one in 10 Brits intend to withdraw money from their pension savings after 6 April. Of these, 27% cite the reason for this as being the worry that the goal posts will change in the future, restricting their later ability to access their money. These fears seem to stem from a widespread mistrust of political parties, with 39% of those questioned aged 55 or over saying that they do not trust any political party to provide a fair pension system.

Commenting on the results, Andrew Tully of MGM Advantage said: "The lack of trust in politicians and constant meddling in pensions is driving some people to consider cashing in their pensions because they don't think the changes will last. What we need now is amnesty on policy adjustment. Whoever is in power after 7 May needs to give both the public and the industry time to adjust and put in the hard work that will be required to make the changes a success."

Making the most of the freedoms

If you're worried about scams, or you need some guidance on how to make the most of the new freedoms, the best thing you can do is get advice. You can check out our annuity planner to see if this is an option for you, and it is also a good idea to speak to a financial adviser. They can help identify the best options for you and your planned retirement lifestyle.

Whatever you do, take your time and weigh everything up. This way, you will make the most of your pension savings when the new freedoms arrive and won't be a victim of scammers.

What next?

Find an annuity

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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