How to spot and avoid chilling scam that could ruin your retirement

In the 30 years I’ve been a regulated financial planner, I have encountered pension scams twice, both linked to the same company.

Unfortunately, the couples who were introduced to me, despite being very academically bright and wealthy, didn’t realise they had been scammed. Years later, they still haven’t recovered their money.

Pension scammers continue to target pots of all sizes, with individual losses ranging from under £1,000 to as much as £500,000. While the typical victim was often described as a man in his 50s, it’s important to note that anyone can fall prey to these scams.

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The most recent data from Action Fraud shows the average loss per victim in 2024 was £33,848, with a total of £17.5 million stolen across 519 reported cases, highlighting the growing sophistication and severity of these scams.

Football fans approaching retirement remain particularly vulnerable, with research showing that only 43% know the value of their pension pot, and 45% are unaware of how to verify the legitimacy of unsolicited pension offers.

If someone contacts you unexpectedly and claims they can help you access your pension before the age of 55, be aware that the call is illegal and likely from a fraudster. You should report such contacts to Action Fraud by calling 0300 123 2040 or visiting their website www.actionfraud.police.uk.

Scammers may tempt you with seemingly lucrative investment opportunities, such as a new hotel in an exotic location, but don’t be fooled. These offers are often fake, designed to persuade you to cash in your pension and transfer your funds.

Once the money is transferred, it’s usually too late to recover it, and you could also face a tax penalty of up to 55% or substantial fees.

To protect yourself, always deal with FCA-regulated firms. Verify that both the advisor and the firm they represent are registered on the FCA Register at register.fca.org.uk. Be vigilant and confirm the identity of your advisor to ensure they are not impersonating a financial expert. The Pensions Advisory Service offers an online tool to help you determine if you’ve been scammed.

While stories of people losing their life savings to pension scams are alarming, it’s important to remember that such occurrences are rare. Always err on the side of caution, and when in doubt, consult with a financial planner to review any offers or decisions.