A "sophisticated" pension scam is costing victims an average of £47,000, according to a warning from Standard Life. The financial services company has found that 62 per cent of UK adults said they were confident they could identify a pension scam, yet periods of change or uncertainty can create opportunities for fraudsters.
Scammers Exploit Tax-Efficient Solutions
As people review their pension arrangements, scammers may attempt to present themselves as offering timely or tax-efficient "solutions". This can include suggesting pension savings can be moved into alternative arrangements that avoid inheritance tax. While these may sound credible, they can expose individuals to significant financial harm. The average pension scam is estimated to cost £47,000, and losses are often irreversible.
Standard Life's Warning on Sophisticated Tactics
Donna Walsh, Head of Master Trust and IGC Governance at Standard Life, said: "Pension scams are increasingly sophisticated making them appear genuine." She noted that scams can come with convincing websites, positive reviews, familiar names and paperwork, which is exactly why they can be so dangerous.
Walsh added: "What stands out from our test is that many people could benefit from greater awareness of some key pension rules and warning signs. That’s important because understanding how pensions work can help people make more confident decisions and better protect the savings they’ve worked hard to build."
Industry Action and PSIG Reinvigoration
The industry, from providers, workplace employers, and advisers to regulators, is taking action and pulling together to build awareness to help pension scheme members spot fraudulent approaches. Walsh highlighted that a reinvigorated PSIG (Pensions Scams Industry Group) is stepping up its activity and education programme to combat such approaches.
With changes to the inheritance tax treatment of pensions approaching and people likely to be reassessing their retirement plans, increased vigilance is required, as fraudsters often exploit periods of change and uncertainty. Walsh advised: "The best protection people can take is to pause, check independently and avoid being rushed. A legitimate pension opportunity should never depend on pressure, urgency or confusion. If in doubt, contact your pension provider."
The more people understand the warning signs and know which checks to make, the better placed they are to protect their savings, achieve greater financial security in later life and make informed decisions about their financial future.
