Scams warning for pension savers worried about impact of coronavirus on finances
Fears over the impact of coronavirus on financial markets and household budgets could make pension savers more vulnerable to scams, regulators are warning.
Savers are being urged not to rush into any decisions which could damage their long-term interests and see them losing cash that they have built up over their working lives.
People should check the firm they are dealing with is authorised and unexpected approaches and too good to be true offers should be rejected.
The warning comes from the Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) and is also being supported by the Money and Pensions Service (MaPS).
They are urging savers to take their time and visit the Pensions Advisory Service website for free pensions guidance before making decisions.
They can also go to the ScamSmart website to learn how to protect themselves from pensions scams. This includes people already retired who are thinking again about their options.
Those behind the warning said the coronavirus outbreak has had an impact on all kinds of companies, including those listed on the stock market. As a result, markets have been volatile and are likely to remain so for a while.
As people worry about the impact on their pensions and investments, scammers could use this as an opportunity to strike.
Charlotte Jackson, head of pensions operations and consumer protection at MaPS said: “This is a very worrying time for people. For those on the point of retiring, the impact of the virus on the financial markets and therefore on pension savings has been damaging.
“If you are in a workplace pension, investments are designed to deliver over the long-term with measures in place to reduce the risks faced by investors as they approach retirement.
“However, if you have chosen to invest your retirement savings yourself or were looking to retire soon then you may find yourself having to accept a lower income or retiring later. The key thing is to take as much time as you can and try not to panic.
“Most importantly, before taking any major decisions relating to your pension take the time to get independent guidance or advice. You can call the Pension Advisory Service on 0800 011 3797 or make an appointment with Pension Wise by going online.”
Mark Steward, the FCA’s executive director of enforcement and market oversight, said: “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.”
Charles Counsell TPR’s chief executive said: “Pensions remain a safe long-term investment for your retirement and it’s important to avoid hasty decisions about cash that’s taken a lifetime to build.
“We urge you not to transfer your pension into another arrangement now and regret the decision later.”
He continued: “For those who have a final salary pension, staying in your existing scheme is still likely to be the best long-term arrangement. All savers should be very cautious about making changes at this time.
“More than ever before, you should visit the Pensions Advisory Service website for impartial guidance before making any decision about your retirement or get financial advice from a Financial Conduct Authority-authorised financial adviser.”
Savers who are worried about their retirement savings are being encouraged to consider taking four steps:
1. Visit the Pensions Advisory Service website – www.pensionsadvisoryservice.org.uk – for guidance on how Covid-19 may have impacted your pensions.
2. If you are aged 55 or over and considering drawing your pension, you can book a Pension Wise guidance session to fully understand your options.
3. Use a financial adviser to help you make the best decision for your own personal circumstances. Make sure the firm you are dealing with is FCA-authorised, and they are permitted to provide pension advice. You can check the firm you are dealing with is authorised by visiting the FCA Register -register.fca.org.uk.
4. Learn how to protect yourself from pensions scams by visiting the ScamSmart website – www.fca.org.uk/scamsmart.
More information about pension scams is at www.fca.org.uk/scamsmart/how-avoid-pension-scams.
Sir Steve Webb, a former pensions minister who is now a partner at pension consultants LCP, said: “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.”