Ways to Avoid A Pension Scam

Retirement Advantage recently conducted research in which they found that nearly 18 percent of those over the age of 50 in the UK have been targeted by pension scammers.

This translates to nearly 1.8 million people who may have been contacted by text, phone or email and have been offered investment opportunities and unsolicited pension advice.

Who is Likely to be a Target?

Generally, those who are nearing their retirement and haven’t invested much are vulnerable and this is precisely what scammers exploit to their advantage. Those who have little idea about how to use their pension pot are taken for a ride by these imposters who pretend to be investment experts.

Even if you are a wise person there is a fair possibility that you can be hoodwinked as it is not always easy to spot a crook. You can keep yourself safe if you know what to look for and maintaining such vigilance is the best way to steer clear of such fraudsters.

When the benefits of taking out a certain policy sound too good to be true it should raise concern in your mind about the intentions of the caller. In the following section we have listed several ways in which you can avoid being a victim of a pension scam:

Being Offered Help to Access your Pension before 55

It is only in very specific circumstances such as being extremely ill that you may be allowed to access your pension pot before attaining the retirement age. If you are indeed suffering from health problems, you become eligible to access your pension but you should contact your pension provider first.

Taking somebody else’s word on it and revealing crucial information is the perfect recipe for disaster. However, if you are not ill and a person promises you early access can potentially be a scammer. It pays to be aware of the laws relating to premature withdrawal of your pension pot and decide for yourself what is fraudulent and what is not.

Unsolicited Advice about Investment of Pension

The amount that you can withdraw from your pension pot without any tax liability is 25 percent. Any amount that you withdraw above this limit is liable to get taxed. Therefore it is advisable that you only withdraw the amount that you absolutely need.

It is not uncommon for people to use their pension pots for investments but there are certain warning signs that you should look out for:

  • Assured Returns (Guaranteed returns from an investment is nothing but a scam. Remember, it is a warning if it sounds too good to be true)
  • Big Promises (Being offered benefits that no other investment policy offers in the market is definitely a sign that something is wrong)
  • Exotic investments (things like overseas properties, burial plots and storage pods which sound too good to resist)

Be Wary of Those Exerting Sales Pressure

It is a huge decision to select the right retirement product and ideally you should be given some time to go over the pros and cons of each investment scheme that is offered to you.

You will have to live with this decision for a long time and rushing into it can make you compromise on your rationale. Since it concerns a massive amount of your wealth being hasty can prove to be dangerous.

Scammers will try to exploit the initial interest that you show and try to hard sell the fraudulent investment scheme. They may tell you that there is a limited window of opportunity to sign up for the scheme. You should hear the warning bell the second you are offered free delivery of paperwork to your house in order to speed things up.

The caller is Not Registered with FCA

A register which is maintained by the Financial Conduct Authority (FCA) shows the regulated individuals and firms in the financial services industry. The general public has been given access to this register and they are also advised to look up details of any person who approaches them with such a scheme.

For greater clarity, you can also turn to the internet. It has simplified our lives to a great extent by making many resources available to us at no charges such as tools to compare investments or free Will creator to write Wills.

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