Pension Fraud

Increasing numbers of pension scheme members aged 55 or over have been contacted by a potential pension scammer by phone, text or email, according to recent reports according to lawyers Pinset Masons

Product provider Retirement Advantage shared the results of a survey this week in which one third of respondents aged 55 or over reported having been contacted by a potential scammer in the past three months - up from one in five of those aged over 50 during the firm's last survey in June 2015. Respondents said that they had been offered "free pensions advice or investment opportunities" in these communications.

The figures were published in the same week that it emerged Police Scotland was investigating a £10 million pension liberation scam affecting as many as 300 people. Detective Inspector Graeme Everest of the central police force told Pensions Expert that many of the victims in this case had "recently been made redundant" or were otherwise financially vulnerable, and had been offered referral payments to encourage them to take part in the scheme.

The new rules around access to pensions had "opened up the over-55s to greater risk of fraud", there also appeared to be "greater awareness of pension scams" as a result of recent campaigns from the regulators.

"It is encouraging at least that those surveyed appear to be recognising these approaches as being potential scams," he said.

"Inevitably that will not be the case all the time, and there will be plenty of pension funds falling prey to fraudsters exploiting gaps in knowledge and luring those in the over-55s market into superficially attractive investment opportunities. More sophisticated fraudsters will cover their tracks though, so it could be some time before victims find out they have been scammed and we start to get a proper idea of sums lost – which is borne out by the separate news from Scotland," he said.

Changes to the law in April 2015 gave members of defined contribution (DC) schemes more freedom to access their pension savings from the age of 55 without incurring heavy tax penalties or necessarily having to purchase an annuity. At the time, financial watchdogs warned that this could lead to an increase in scammers contacting people approaching 55 in order to exploit their interest in the change in the law.