How to protect your pension pots from investment scams and negligent trustees

31st January 2019 by RetireEasy

The Government’s Insolvency Service is warning people to guard their pension savings from investment scammers and negligent trustees.

Since 2015, the Insolvency Service has applied to the courts to wind-up 24 companies that have carried out a form of pension misuse.

It estimates that there have been close to 3,750 victims connected to those 24 companies, who between them have made £202 million worth of contributions.

The pension misuse varies from convincing people to access their pensions and invest in unregulated schemes to pension trustees not carrying out their duties properly.

Victims of pension scams last year lost an average of £91,000 each to fraudsters and as identified during FCA and TPR’s ScamSmart campaign, common tactics used include cold-calls, offers of free pension reviews and promises of high rates of return.

The government has recently announced a ban prohibiting cold-calling in relation to pensions – although there will inevitably be concerns that some unscrupulous operators will either ignore this ban or find ways round it.

The long-overdue cold call ban was in response to rogue Introducer firms cold-calling people, inviting them to transfer their pension pots into occupational pension schemes. However, the introducers misled clients about their expertise and offered guaranteed returns which they couldn’t deliver.

Members’ funds were then largely invested in unregulated investments in storage units which did not yield the level of returns promised to members.

To help prevent you from becoming a target for pension abuse, the Insolvency Service recommends:

  • Be wary of calls out of the blue. Get the company’s name and establish their credentials using the FCA’s Financial Services Register.
  • Seek financial guidance or advice before changing your pension arrangements or making investments.
  • Don’t be rushed or pressured into making any decision about your pension and be wary of promised returns that sound too good to be true.

For further information about scams you can visit the ScamSmart website and if you suspect a scam, you can report it to Action Fraud UK.


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