Pension savers have lost a total of £26.4 million to pension scams in the past few years.

Figures released by the Pensions Management Institute (PMI) show that over £26 million was lost to pension scams between 2020 and 2022. During the same time, 1,595 pension scams were reported in England and Wales. The damage equates to an average loss of £16,500 per pensioner. That’s the equivalent of a full year’s living expenses for a pensioner with a moderate standard of living, in line with the Retirement Living Standards (RLS).

Robbing savers of their security and future

The Pensions and Lifetime Savings Association (PLSA) has released their updated RLS this month. The RLS are a benchmark that shows what life after work could look like at 3 different levels – minimum, moderate and comfortable. According to the RLS, a single person needs £14,400 to be able to afford a ‘minimum’ standard of living. This means that single retirees who were living at a minimum standard and have been scammed during the pandemic will have been robbed of the money they need to live on for a whole year. This would have undoubtedly had a detrimental impact on people’s lives depriving them from the future they’ve spent a lifetime investing in.

Scams take advantage of world events

The Covid-19 pandemic grouped with the cost of living crisis seem to have created the perfect ecosystem for scammers to thrive in and become even more dangerous.

In the midst of the pandemic, in 2021, reports of pension scams increased by 45%, according to the Money & Pensions Service (MAPS). Evidently, fraudsters tried - and on many occasions succeeded – in taking advantage of the widespread anxiety caused by the pandemic.

The cost of living crisis could also be one of the reasons for the increasing prevalence of pension scams. Often, fraudsters prey on people’s vulnerability and anxiety for meeting financial demands. They take advantage of the urgency and desperation some savers experience.

They are ruthless and will use every opportunity they get to trick you out of your pension. Staying vigilant and wise to the increasingly sophisticated methods used by scammers even at times of extreme financial constraints is exceptionally important.

Pension scams are extremely dangerous, however since the cost of living crisis struck, other types of scams have occurred too. For example, those offering ‘help’ with:

• fuel bills
• devices to reduce power and fuel consumption
• access to government grants and non-existent loans
  

So, keep your guard up at all times, no matter which aspect of life you’re being approached about.

How to protect yourself

Put your critical thinking cap on and question and check every offer no matter how big or small it is.

Recognising a scam is half the battle so here are a few tips on what to do if you’re being approached:

• Reject out-of-the-blue emails, calls and contact. Callers may claim they’re from government-backed bodies to trick you into giving them information.
• Check who you’re dealing with. If it doesn’t feel right, it probably isn’t and it only takes a few minutes to check. It could cost you your savings if you don’t.
• Avoid ‘investment deals’, ‘free pension reviews’ and early access to your pension before age 55.
• Don’t fall for professional-looking websites or brochures.
• Never feel rushed into making a decision. Take your time to check things over, even if you miss out on a ‘great’ deal.
• Fraudsters are only getting smarter so you must stay vigilant.

Here’s what to do if you think you’re being targeted

• Learn what red flags to look out for and beware at all times!
• If you’re looking to turn to an independent financial adviser (IFA), make sure the financial adviser you choose is on the FCA approved register. To find a list of IFAs in your local area visit Unbiased.
• Visit MoneyHelper for some useful information on the different types of scams and how to protect yourself
• Report fraud any time of day and night on the Action Fraud website or by calling 0300 123 2040 Monday to Friday 8am - 8pm. If you are calling from abroad call +44 300 123 2040.

A lot of crime goes unreported – do your bit

The Financial Conduct Authority (FCA) estimates that less than 1 in 5 instances of scams are reported.

One of the reasons for this is the trauma of lost savings and the shame victims feel. People feel embarrassed if they are being tricked so hearing the stories of others can act as a catalyst for more people to come forward and share their story.

If you’ve been scammed and want to share your story to help other victims or to protect those that are yet to be targeted, turn to Action Fraud. The Pension Regulator has said that the delay in realising people have been scammed makes scamming attractive to criminals. This is why it is important we all do what we can to prevent scams.