Pension savers urged to 'scam-proof' their income

Pension savers are being urged to "scam-proof their savings" as part of a campaign launched today ahead of changes which will give people the freedom to use their retirement pots like a bank account.

The Pensions Regulator has refreshed its "scorpion" campaign to alert retirement savers and pension scheme trustees to the risks of people being tricked by out of their money by cold calls and texts promising a "free pension review" or mentioning a "legal loophole".

To date, people aged under 55 have been the primary target for stings which promise the ability to release their pensions as loans or upfront cash.

But, from April 6, new flexibilities will give people aged 55 and over more freedom over how they access their pension pot. Instead of being forced to buy a retirement annuity with their pot, they will be able to take money out in one go or in a series of slices. People using the new freedoms will be charged their marginal rate of income tax.

The campaign warns that scammers will try to flatter, tempt and pressure victims into transferring their pension fund into an investment with attractive and often unrealistic returns. Once the victim has signed the forms and the transfer has gone through, they are unlikely to see their money again and they could be left with a hefty tax bill.

Free, impartial guidance will be provided to help people understand the pension reforms. The guidance, which is being provided by Citizens Advice and the Pensions Advisory Service, goes under the banner Pension Wise.

The Pensions Regulator said people approaching 55 may be contacted by scammers seeking to exploit people's interest in the change in law and it said pension scheme trustees should encourage members to contact Pension Wise.

Pensions Minister Steve Webb said: "You can spend years saving into a pension only to find yourself tricked out of your money in the blink of an eye by these unscrupulous crooks.

"We are taking tough action along with our partners to tackle this scourge, but people must be vigilant. To get genuine guidance on your options, people should contact the free and impartial Pension Wise service.

"If you are cold-called by someone offering you a free pensions review, it's probably a scam so put the phone down."

The Pensions Regulator's chief executive Lesley Titcomb said: "The people behind pension scams are often agile, sophisticated and organised. Whatever the law is, they will seek to exploit it - so we expect the scams we see to continue to evolve in light of the new flexibilities available.

"Arm yourself with the right information and never make a hasty decision. Once the transfer has gone through, it's too late."

As well as using the Pension Wise service, pension savers are advised that if they are approached, they should check that their adviser is registered with the Financial Conduct Authority (FCA).

If people are concerned, they can contact the Pensions Advisory Service on 0300 123 1047 or if they have already accepted an offer, they can report it to Action Fraud at www.actionfraud.police.uk

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