A large number of UK adults could struggle to spot signs of a pension scam, according to new research from Standard Life.
Despite nearly two-thirds (62%) of people saying they feel confident that they could spot a pension scam, three in five (60%) people did not know that pension providers or advisers are not legally allowed to cold call people about pension opportunities or reviews.
According to Report Fraud, UK pension scam victims lost an average of £47,000 last year. More broadly, the findings suggest some savers may be vulnerable to approaches that exploit misunderstandings about how pensions work, what legitimate firms can and cannot do, and which checks are worth making before taking action.
Standard Life’s research found nearly three-quarters (73%) of people either believed that if a company appears on the FCA register, any investment it offers is guaranteed to be safe, or were unsure. In addition, four in 10 (40%) either believed you can withdraw money from your pension at any age or said they did not know.
Donna Walsh, head of master trust and IGC governance at Standard Life, said: “Pension scams are increasingly sophisticated making them appear genuine. What stands out from our test is that many people could benefit from greater awareness of some key pension rules and warning signs. That’s important because understanding how pensions work can help people make more confident decisions and better protect the savings they’ve worked hard to build.
“The industry from providers, workplace employers, and advisers to our regulators, is taking action and pulling together to build awareness to help pension scheme members spot fraudulent approaches.”
The findings also suggest some people may be placing trust in factors that do not necessarily indicate whether a pension opportunity is genuine. One in five (20%) believe a professional-looking website and positive online reviews are reliable indicators that a pension opportunity is genuine, while 14% believe adverts on professional or social networking sites mean a company is trustworthy and can act in their best interests.
Walsh warned that with upcoming changes to the inheritance tax treatment of pensions and people likely to be reassessing their retirement plans, fraudsters are often quick to exploit periods of change and uncertainty.
“The best protection people can take is to pause, check independently and avoid being rushed. A legitimate pension opportunity should never depend on pressure, urgency or confusion. If in doubt, contact your pension provider.
“The more people understand the warning signs and know which checks to make, the better placed they are to protect their savings, achieve greater financial security in later life and make informed decisions about their financial future,” Walsh added.
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