With more than 8 million workers now enrolled into a workplace pension, there’s little doubt that auto-enrolment is improving the savings habit but this success also presents an increased attraction to criminals too.
Investment scams are on the increase, and the favoured target of the fraudsters is those over the age of 55, as they’re most likely to be in possession of a larger pension pot and able to start accessing it.
The rise of pension scams
This year the Financial Conduct Authority (FCA) has been running a ‘ScamSmart’ campaign to raise the awareness of pension scams, bringing to light the alarming facts we all need to be aware of.
Their research shows some interesting facts:
One fifth of over 55s (22%) believe they have been the target of a pension scam but they’re staying silent about it.
49% say they don’t know how to report fraud to
Brits are more likely to report fly-tipping (81%) than report an investment scam (63%)
Many people are being cold called or emailed directly, with tantalising and believable offers for free pension reviews, pension investments or upfront cash offers – all with the aim of parting them from their retirement savings. And fraudsters are using increasingly sophisticated techniques to manipulate people out of their hard-earned retirement savings meaning that even experienced investors are the victims of this kind of investment fraud.
The figures are stark and the true picture could be even worse because many choose not to report what’s happened.
£1.2 billion UK loss to investment scams every year, according to the FCA.
3,186 reports to Action Fraud of investment scams 2015/16.
Over £32,000 lost on average by victims.
You can play an important role in educating employees to be aware and encourage any who fall victim to this type of fraud, to report suspicious activity and actual crime to Action Fraud or the FCA itself.
The FCA takes civil court action to stop illegal activity and for the most serious cases, pursues criminal prosecution. Last year, the FCA returned over £3 million to victims of unauthorised activity, including investment fraud.
Jamie Jenkins, Head of Pensions Strategy at Standard Life, sums up the position:
“In recent years, the threat has been that people are lured into transferring their pensions before the age of 55 in order to access cash. This is only an option in very rare circumstances and usually results in the loss of some or all of the person’s pension fund through a combination of tax, charges or simply theft. While this threat continues, the checks we have put in place have made this very difficult for those operating such schemes.”
“However, once people have withdrawn pension savings from the age of 55, they may be targeted directly by fraudsters, and will no longer have any protection from their pension provider. As such, it’s crucial that people themselves get ‘ScamSmart.’”
If one of your employees came to you because they think they’ve been targeted by pension fraudsters, would you know what to do and how to help them?
Help your employees know the risks and to be ScamSmart
Get your employees on the front foot against pension fraud. You can download and use the ScamSmart infographic in your employee communications.
Keep an eye on the warning list of firms to avoid and encourage your employees to do the same. Meanwhile, ScamSmart has worked with real-life victims telling their stories, to help your employees recognise that anyone could be targeted, helping them understand more about what to look out for.
And if the worst happens and an employee comes to you reporting a scam attempt or an actual scam, you can advise them to:
- Contact the FCA consumer helpline on 0800 111 6768.
- Complete the FCA’s reporting form.
- Read more on the ScamSmart website – especially if you or your employee has already been a victim of pension fraud.
Standard Life – protecting your employees retirement
As a responsible pension provider, we’re supporting the FCA and taking part in the ’ScamSmart’ campaign.
Up to the end of September 2017, Standard Life has refused over 610 transfers totalling over £23 million.
For obvious reasons, we won’t go into the details, but we also deploy sophisticated checking techniques if a customer contacts us to ask to transfer a pension, to help our customers identify when a contact might be a dishonest one.