The recent increase in the cost of living in the UK may leave many expats and savers more vulnerable to scammers. This issue is becoming so prevalent that The Pensions Regulator (TPR) has recently unveiled a new three-year plan to protect individuals from increasing threats. Their new plan aims to educate savers about scam threats, encourage higher standards, and combat fraud by preventing, disrupting and punishing criminals.
In this article, we will explore how to identify pension scams using advice from TPR’s plan and some easy ways to keep yourself protected, so you can feel more relaxed when entering your retirement years.
Why is it important to stay aware
It’s not only important to educate yourself about the dangers of pension scams, but it’s also important to keep your loved ones safe, including individuals who aren’t aware of the common signs. Scammers are becoming increasingly undetectable by using clever methods of psychological deception and convincing materials to trick people out of their savings.
Below we will delve into what a typical pension scam is and how TPR defines them.
What is a typical pension scam?
According to TPR and their new plan, a pension scam is defined as:
“The marketing of products and arrangements and successful or unsuccessful attempts by a party (the “scammer”) to:
- release funds from an HMRC-registered pension scheme, often resulting in a tax charge that is not anticipated by the member
- persuade individuals over the normal minimum pension age to flexibly access their pension savings in order to invest in inappropriate investments
- persuade individuals to transfer their pension savings in order to invest in inappropriate investments
where the scammer has misled the individual about the nature of, or risks attached to, the purported investment(s), or their appropriateness for that individual investor.”
It’s important to remember that anyone can be a pension scam victim, no matter how financially experienced they are. Scammers can:
- Provide convincing testimonials and materials
- Sound articulate and financially knowledgeable using credible websites
- Persuade pension savers to transfer their entire pension savings or release funds by making attractive-sounding promises they have no intention of keeping
Usually, the pension money will be invested in unusual and high-risk investments such as:
- Storage units
- Overseas property/hotels
- Renewable energy bonds
It’s also not uncommon that criminals will persuade savers to transfer all of their savings into schemes that the scammer has complete control over.
Furthermore, they will also assure individuals that they can access their pension pots early through ‘loopholes’. This is exceptionally problematic as savers could not only lose all their money but also face a huge tax bill from HMRC if they withdraw before the age of 55.
How to avoid being scammed
- Cross-check licensing information against regulators
All advisories should have their licensing information on the website, which can be checked against the regulator’s databases to ensure it is legitimate.
- Don’t feel pressured
Take as much time as you need to perform your required checks, especially if you are pressured to commit to an ‘amazing deal’ that is too good to be true.
- Get regulated advice
If you want advice, Brite are regulated by the FCA and can talk to UK expats about their retirement plans and options. You can also visit MoneyHelper’s PensionWise, which offers pre-booked appointments to over 50s with a defined contribution pension.
There are also free tools, such as this pension scam predictor – a short quiz with 20 questions that can give you a more unambiguous indication of how likely you are to be scammed.
If you think you have been scammed in England, Northern Ireland & Wales, it’s essential to submit a crime report or an information report so authorities can investigate and prosecute scammers and get a clearer picture of the effect that scams have on pensions.
What to do next
Brite offers an all-in-one pension service – from advice to transfers to pension administration and asset management. This means we don’t use middlemen or third parties – so we keep control of costs, and you keep more of your retirement money. We believe in acting in your best interests which is why we are entirely transparent about our fees.
Contact us today to speak with a qualified, experienced advisor.