Pensions scam warning: Look out for these hoax schemes that ‘ruin people’s lives’

The Pensions Regulator (TPR) has unveiled a list of seven ploys that scammers use to lure people into handing over their cash. Nicola Parish, executive director of Frontline Regulation Criminals at TPR, said: “Criminals who steal people’s pensions ruin lives. It’s plain and simple.

“And as the regulator for workplace pensions, our primary focus must always be on ensuring savers’ pension money is protected now and in the future.

“Scammers use psychological deception and professional looking materials to trick people out of their savings.

“If they can, they will take every penny and devastate savers’ financial futures.

“That’s why we are determined to do all we can to educate savers on the risk of scams and to help stop scammers in their tracks.”

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The devious tactics that scammers used to convince victims to hand over their money include:

  • Investment fraud – Misrepresenting high-risk or false investments to savers
  • Pension liberation – Conning savers into accessing their pension pots under the age of 55, unaware that they will get a tax charge or could be engaging in tax evasion
  • Scam pension schemes and providers – These bogus schemes either don’t exist or exist but are committing fraud
  • Clone firms – Fake schemes and providers that are disguised as legitimate entities
  • Claims management companies – This includes cold-callers who will claim a person has been mis-sold a pension, and then ask for an advance fee to start a claim
  • Employer related investment (ERI) – Breaching ERI restrictions when an employers diverts their employees’ pensions into inappropriate investments, causing losses for savers
  • High fees – Excessive fees often layered through needlessly complex business structures

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The TPR has unveiled a strategy to better protect savers from being a victim of scams, through educating people, improving industry practices and stopping and punishing fraudsters.

The regulator has warned that too many schemes have poor guidance and administration, leaving people’s savings exposed to fraudster.

Ms Parish said that savers could be especially vulnerable with the cost of living crisis and the impact of the coronavirus pandemic.

She said: “Industry must act to deliver good outcomes for savers by being proactive in their pension scam warnings, innovative in driving improvements in protection standards, and reporting potential crimes to the authorities.

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“Building on this, we and our partners in regulation, law enforcement, and government must also play our part – making sure schemes are up to standard and working together effectively to keep savers’ money secure.

“Every one of us has suffered over recent times because of the Covid-19 pandemic and cost of living pressures.

“It is at times like these that we know savers could be vulnerable to the approaches of pension scammers.

“That’s why now is the time for industry, regulators, and Government to do more and truly work together to put savers at the heart of all that we do.”

The regulator has warned that too many schemes have poor guidance and administration, leaving people’s savings exposed to fraudsters.

Research by PensionBee shared with Express.co.uk found that only 57 percent of victims ever fully recover what they have lost.

Phishing and identity fraud were among the most common ploys that scammers use.

Romi Savova, CEO of PensionBee, told Express.co.uk: “It’s a sad reality that sophisticated criminals prey on savers.

“Savers are simply seeking to make the most of their money in a confusing economic climate.

“Scammers can target anyone, so it’s crucial that all consumers remain vigilant when sharing any personal information and refuse to engage with anyone who contacts them out of the blue.”