Consumers missing pension scam warning signs, reveals Citizens Advice

Nine in ten people (88%) miss common warning signs of a pensions scam - such as unusually high investment returns, cold calling and offers of free financial advice - despite feeling confident they can spot fraudsters’ tricks.

A new report from Citizens Advice, ‘Too good to be true’, reveals a mismatch between people’s confidence in spotting a scam and their ability to do so. Three in four (76%) said they are confident they can identify a pension scam but just 12% were actually able to do so when a scam was presented to them.

The new research highlights how scammers’ tactics are shifting away from pension liberation schemes offering high rewards and moving towards free pension reviews and advice as a first step towards tricking people out of their pension pots.

A 59 year old man sought help from Citizens Advice after a near miss with a pension scam. He was cold called by a company offering a 'free pension review' which recommended he invest his retirement savings in Hong Kong. The man was offered an appointment the next day but when documents were couriered to his home, he realised something was amiss and refused to sign. He has since been helped by Citizens Advice to stop the company from contacting him again.

The report also reveals people are particularly at risk of scams from phone calls, post and emails which come out of the blue. As many as 10.9 million consumers have received unsolicited contact about their pension in the last year.

Almost two thirds of consumers (64%) say they would consider an unsolicited offer about their pension and many would only consult informal sources about whether the approach is genuine.

When asked how they would check whether a pension offer was legitimate, almost half of those who would consider an unsolicited offer about their pension (45%) say they would look up a company’s website and over a third (36%) would discuss with family.

Only one third of people (33%) say they would make sure the company is listed on the Financial Conduct Authority’s online register, which is the best place to check whether a company is authorised to give regulated advice.

Gillian Guy, chief executive of Citizens Advice said:

“Fraudsters have shifted their tactics to rob people of a retirement income.

“It’s difficult for consumers to stay ahead of pension scams as they evolve. Many scammers use professional looking websites and leaflets to fool their victims into signing up to free pensions advice or cold call with offers of unusually high investment returns.

“Before considering any kind of pension offer, you should check the Financial Conduct Authority’s website to make sure the company is legitimate. If you are are worried that you may have been targeted by scammers you can get help and support from Citizens Advice.

“If you are over 50, Pension Wise guidance can equip you with the knowledge of what to look out for to avoid falling victim to scams.”

Top tips for identifying a pension scam

  1. Ignore any contact you receive out of of the blue about your pension. This could be in person, online, on the phone or in the post

  2. Watch out for any promotion offering you more than 8% return on your pension investment

  3. Be wary of any offer to access your pension before 55. Accessing your pension early can mean you are hit with a high tax bill of 55%, as well as losing any pension savings in a scam.

  4. Don’t feel pressured to make a decision about your pension straight away, instead take your time

  5. Watch out for extravagant sounding investments based overseas

  6. Check the Financial Conduct Authority (FCA) online register to make sure the company approaching you is legitimate. Anyone giving financial advice should be registered

  7. If you are making an investment, check the FCA ScamSmart warning list for known investment scams

  8. If you are transferring a pension, ask your current pension provider to check the HMRC registration of the new scheme to check it is legitimate

Notes to editors

  1. General public polling provided by Populus through an online poll of 2,006 GB adults 18+(19-21 February 2016).

  2. Any scaling up calculated by Citizens Advice is based on figures for the Great Britain adult population taken from the 2014 ONS population estimate . 

  3. Citizens Advice delivers face to face sessions of the Government’s Pension Wise service. You can book a telephone or face to face Pension Wise appointment by calling 0800 138 3944.

  4. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website .

  5. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.

  6. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk

  7. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.

  8. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication  Advice trends .

  9. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.