Victims of pension scams have warned of the devastating impact of losing thousands of pounds in retirement savings as part of a hard-hitting campaign to help tackle the problem.
They have spoken out in a bid to prevent others from being enticed into trying to access their pension pot as a lump sum or loan before age 55 without understanding the tax penalties - or from being scammed into moving their retirement savings into unregulated high-risk or bogus investments that could result in them losing their entire pension pot.
The known amount of funds paid into pension scams now stands at £495m in total. However, it is suspected that this amount is likely to be substantially higher and not all activity is reported.
One victim took his own life
One woman, whose 40-year-old son took his own life after never receiving a promised £17,000 lump sum following the transfer of his £42,000 work pension, said: “I don’t want other mothers to suffer what I’ve been through, and what my family has been through.
“No matter how desperate things get, don’t be tempted to cash in your pension. Don’t do it - the people behind these scams are rogues who exploit people’s vulnerabilities.”
Another 49-year-old scam victim, who is potentially facing an £18,000 tax bill and risks losing her home after falling victim to a ‘pension loan’ scam said:
“These scams target vulnerable people. I feel very angry that I have been misled. Ignore the sales patter, ignore the glossy websites, ignore the cold calls and text messages. Go to an independent financial adviser – speak to an expert.”
As part of the Government awareness drive, The Pensions Regulator has refreshed its ‘Scorpion’ campaign material to reinforce the message to consumers not to be ‘stung’ by cold calls, text message spam or website offers claiming to be able to help them cash in their pension.
Pension scams may sound legitimate but there is a high risk that once members release their funds in this way, their money will be moved into dubious investment arrangements, often overseas and unregulated. Home visits from ‘introducers’, offers of ‘free pension reviews’, claims about ‘legal loopholes’ and unusual investments like overseas property, storage units or biofuels are all used to fool members into thinking they’re being offered a legitimate pension transfer.
Members are often not properly warned that if they access their pension pot before the legal minimum age of 55, they face high tax charges and those arranging the transaction will cream off a significant percentage as fees.
The new campaign is being led by the Department for Work and Pensions, The Pensions Regulator, The Pensions Advisory Service, Money Advice Service, Financial Conduct Authority, Serious Fraud Office, HMRC, Action Fraud, National Crime Agency and City of London Police.
For further information visit www.pension-scams.com for more information.
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To report a fraud and receive a police crime reference number, call Action Fraud on 0300 123 2040 or use our online fraud reporting tool.