How to spot a scam

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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

Savers now have greater flexibility over how they use their hard-earned pension pot than ever before. Once you reach age 55, you can spend or invest your retirement savings as you want - although remember withdrawals will be taxed in the same way as income.

These freedoms aren’t just attractive for savers, however – scammers are also attacking the retirement market with increasingly sophisticated schemes designed to con people out of their hard earned pension pot.

The Government and regulators are doing all they can to stop these fraudsters, including the FCA recently launching its Scamsmart initiative, a dedicated website which helps investors check their investments they have been offered and avoid pension scams. You can find out more about the initiative here.

However, ultimately it is down to you to ensure your pension doesn’t find its way into the wrong hands. Here are my five top tips to protect your savings from scammers.

1. If someone calls you out of the blue to talk about your pension, hang up!

I’m sure at some point you’ve received a phone call from someone you don’t know claiming to offer an incredible investment opportunity for your savings or a ‘pension review’ service. If this happens, hang up immediately! Equally, don’t respond to text messages or emails from someone you don’t know claiming to hold the key to retirement nirvana. In all likelihood this will be a scammer phishing for victims, so whatever you do don’t take the bait.

2. Don’t deal with unregulated ‘advisers’

While telephone, text and email remain the weapons of choice for the modern con artist, some continue to knock on doors; usually targeting older people they think are more likely to be vulnerable. So make sure you only deal with FCA-regulated advisers – this is particularly important as if you are sold an investment by an unregulated individual, you won’t have recourse to compensation. You can check if someone is a regulated adviser by searching the FCA register.

3. Be wary of overseas investments

Scammers often promise double-digit returns through exotic investments in far-flung locations. So if you’re told you can get 10%+ annual returns from a teak plantation in South American or a hotel room in Spain, tread carefully and do your due diligence. Often fraudsters will advertise investments in an asset that doesn’t exist or hasn’t yet been built, so don’t hand over your cash unless you’re 100% confident you’re being sold a genuine, bona fide investment.

4. Watch out for schemes offering ‘guaranteed’ returns

Nothing, and I mean nothing, is guaranteed when it comes to investments. The closest thing you’ll get are Government bonds and final salary pensions – ironically the very things scammers are often trying to part you from. So if a company you’ve never heard of says it can deliver GUARANTEED returns of any amount, don’t touch them with a barge pole.

5. Don’t rush to make a decision

Ultimately if you want to invest in something high risk or unregulated, there is nothing to stop you. But don’t be forced into doing something you aren’t comfortable with and might regret by a pushy salesman desperate to boost his own commission. Your pension might just be the most valuable asset you ever own, so invest it wisely.

For more information about investment scams, pension fraud, and how to keep your account safe, you can visit the our security centre.


ajbell_Tom_Selby's picture
Written by:
Tom Selby

Tom Selby is a Senior Analyst at AJ Bell. He is a multi-award-winning former financial journalist specialising in pensions and retirement issues. Tom has over five years' experience working at Money Marketing magazine, where he became the Head of News in 2014. He has a degree in economics from Newcastle University.