Regulators publish warning to savers on increased threat of pension scams

The Financial Conduct Authority (FCA), Money and Pensions Service (Maps) and The Pensions Regulator (TPR) have warned savers against the rising threat of pension scams amid the current coronavirus crisis.

The regulators issued a joint statement to raise awareness of pension scams, highlighting that the rising levels of vulnerability stemming from Covid-19 lockdown are likely to be targeted by scammers.

They have urged savers not to rush decisions about their pension, pointing consumers to the support services in place, such as the Pensions Advisory Service, Pension Wise and ScamSmart.

The FCA also urged anyone considering transferring their pension to check “who they are dealing with”, and to only use firms authorised by the FCA.

FCA executive director of enforcement and market oversight, Mark Steward, said: “Fraudsters will exploit the coronavirus to prey on anxiety and fear of savers and investors, especially those who may be vulnerable.

“Reject all unexpected and unsolicited offers; get to know the warning signs of scams, like high rates of return which sound too good to be true, so-called special offers or pressure to make a quick decision, and check our tips and advice on our ScamSmart website.”

TPR chief executive, Charles Counsell, echoed this message, emphasising that pensions remain a “safe long-term investment” for retirement.

Counsell urged savers to avoid making “hasty decisions” about savings that have taken “a lifetime to build”, clarifying that they should first take the time to genuinely understand the options available.

The regulators also emphasised that TPR was working with scheme trustees in the defined benefit space to "manage schemes’ risks" and "do all it can" to protect benefits following the issuance of updated Covid-19 guidance earlier this week.

The joint statement has been welcomed by industry experts, with former pensions minister and Lane Clark and Peacock partner, Steve Webb, agreeing that scammers would likely see the crisis as an opportunity to “cash in on people’s anxieties".

Webb commented: “The questions I am getting at the moment from members of the public very clearly reflect anxiety about the slump in markets and worry about the potential for further falls.

“It is vital that consumers are protected from con merchants who sound convincing but are actually out to prey on the vulnerable. It is shocking that at a time when we need to pull together there are people who see this as an opportunity to cash in on people's anxieties.

“Savers need to check with impartial sources of advice and guidance before making big decisions about their finances, especially in the current climate, and not be pressurised into doing something they will later regret.”

This was also echoed by AJ Bell senior analyst, Tom Selby, who argued it was good news that the regulator was on “the front foot” by proactively warning savers of the dangers facing their pension.

Selby continued: “These dodgy schemes take many forms, from investment-based scams targeting investors who are starved of income to ‘early access’ pension offers aimed at those who may be struggling to make ends meet."

He emphasised that constantly evolving tactics made meaningful legislative or regulator protections difficult, reiterating the regulators’ message that the best protection is for savers to be armed with the tools and knowledge to spot and avoid a potential scam.

Industry experts had previously warned about the rising risk of pension scams after ActionFraud reported a 400 per cent surge in COVID-19 related scams in March alone, with former pensions minister Ros Altmann, calling for a suspension on transfers for six months.

    Share Story:

Recent Stories

Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Global sustainable credit
Laura Blows speaks to Royal London Asset Management senior fund manager, Rachid Semaoune, about global sustainable credit
Global equities and transition investing
Pensions Age editor, Laura Blows speaks to Royal London Asset Management equity investment director, Jonathan Price, about transitioning to sustainable investments within global equities

Advertisement Advertisement Advertisement