We should never lose sight of the devastating consequences that pension scams can have on both victims and their families.
In the course of our work to disrupt pension scams, we’ve learned of some genuinely troubling cases – of people who face losing their home and being plunged into debt, and of desperate people who have been left suicidal.
We know of one individual who took his own life after he transferred his pension to a scam scheme but did not receive the promised lump sum.
Some people know exactly what they’re getting into and regard it as nobody else’s business what they do with their pension pot. But others are more vulnerable, with limited financial knowledge, and are misled by the sales patter and obfuscation of people calling them with offers of upfront cash or ‘one off’ investment opportunities.
We need to help this group of individuals to protect themselves by spotting the hallmarks of a pensions scam and appreciating the risks involved. Educating people to give these offers a wide berth is our most powerful tool to stop their retirement savings falling into hands of unscrupulous scammers.
That’s why The Pensions Regulator, working with other Government agencies and law enforcement bodies, is launching a new ‘Scorpion’ awareness campaign that places a greater focus on consumer awareness.
Our message to retirement savers is check the facts before you make an irreversible decision – a lifetime’s savings could be lost in a moment. We’re making the material clearer and harder-hitting. We intend to roll out further communications during the autumn and, where we are able, to use our powers to publish information on concluded case investigations.
Scams often look and sound legitimate. Some involve home visits from ‘introducers’, offers of ‘free pension reviews’, claims about ‘legal loopholes’ and unusual investments like overseas property, storage units or bio fuels. Many scammers can be highly persuasive and can pressure the victim into acting impulsively.
In highlighting such cases, we want to show as a deterrent to others the true and sometimes tragic costs to victims who have been caught out. In the vast majority of cases, once the money is transferred the decision is irreversible and there is little chance of recovering the money. Individuals are highly unlikely to be compensated and may end up with a substantial bill for tax and unauthorised payment charges.
We appreciate the support of the financial industry in disrupting pension scams and delivering messages to individuals, particularly at the point of making a transfer. We would like to see trustees, administrators and providers including our new-look Scorpion material in the next annual statement sent to members, and to anyone who requests a transfer in the meantime.
Put simply, a lifetime’s savings can be lost in a moment. Our advice to individuals is to be on your guard and don’t get suckered.
Andrew Warwick-Thompson is executive director for DC at The Pensions Regulator