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Pension scams: how can I protect myself and my money?

Recent research from the Serious Fraud Office warns of a potential £120m pension scam sparking fears that a large number of people may have lost significant sums of money. This scam relates to a self-storage unit investment scheme and it is thought that money will have been lost after that figure of £120m was invested into the scheme.

The Pensions Ombudsman has found that people were lured into this scheme with claims they could double the money they already had saved for their retirement in just six years. In one particular case, a man had been persuaded to transfer £370,000 from his workplace pension to the scheme which offered an 8-12% return.

Storage facilities are becoming increasingly popular and they have also been marketed as a great investment with double digit returns. However, many people appear to have lost some or all of their money after falling victim to the firms who are selling these schemes.

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So far, the Serious Fraud Office are aware of 1100 individual investors who claim to have been affected by this alleged fraud but the number could well be higher as it is thought many people are yet to come forward.

Head of pensions at insurance company Aegon, Kate Smith, says the investigation by the Serious Fraud Office; “is a timely reminder that unregulated unusual investments at home or abroad come with a high risk that people could lose all their hard-earned pension and other savings.”

These scams where people are persuaded to cash in their pension pots and put the money into different investments have seen a significant surge since April 2015 when reforms to the pensions systems were introduced to over-55’s giving them greater financial freedom.

As we are not pension’s advisers, we recommend you get in contact with a licensed pensions adviser for questions and issues. But with scams like this becoming more and more prevalent, how do you keep yourself and your pension pot safe?

  • Scams usually start by someone contacting you out of the blue with regards to an investment or business opportunity, withdrawing your pension money before you reach 55 or the different ways you can invest your pension pot.
  • How can you tell if it’s a scam:
    • They will likely contact you unexpectedly about your pension by phone, text, email or in person.
    • They will use words/phrases such as ‘pension liberation’, ‘free pension review’, ‘one-off investment’, ‘loan’ and ‘loophole’.
    • They are likely to call the investment ‘unique’, ‘ethical’ and ‘environmentally friendly’ etc.
    • They will say that they can help you to access your pension money before age 55 and they will encourage you to take out a large lump sum or the entire total so that they can invest it for you.
    • They are likely to ask for you to transfer your money quickly and will send documents to you by courier but you should never make a quick decision when it comes to your pension savings.
  • You can protect yourself by:
    • Being vigilant at all times and making use of the ‘Take Five to stop fraud’ campaign which offers great advice for dealing with spam calls, texts and emails.
    • You can also check if the person/company who got in touch with you is on the Financial Services Register or call the Financial Conduct Authority. Many scammers claim to be a pensions providers, government agent or a financial advisor.
  • If you think you have been the victim of a pensions scam, get in touch with Action Fraud as soon as possible.

For more information regarding pension scams and how to keep yourself safe, visit the Pension Wise website. We always recommend you get in touch with a licensed and regulated pensions adviser regarding investments, setting up your pension and moving money.

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