Pension cold calling ban: What does it mean for scams?

The long-awaited ban on pension cold calling came into effect on the 9th January 2019. In a bid to protect pensioners being targeted by fraudsters, the ban has now been approved into law. It’s a move that should help the Financial Conduct Authority (FCA) and other organisations reduce pension fraud.

Previous figures released by the FCA and The Pensions Regulator (TPR) have shown how devastating pension scams can be. On average, victims lost £91,000 in 2017. It’s a significant sum that could have a long-lasting effect on retirement plans, as well as causing stress.

Pensioners and those approaching retirement are often targeted by scammers through unsolicited contact. In fact, Citizens Advice previously suggested 97% of scam cases about pension unlocking services stemmed from cold calls.

To entice pension savers, scammers will offer ‘a free pension review’, to unlock a pension early or suggest investments that are ‘high return, low risk’, such are a red flag. However, a poll found almost a third of those aged 45 to 65 wouldn’t know how to check if they’re speaking to a legitimate pension adviser or provider and 12% would trust an offer of a ‘free pension review’.

Highlighting the scale of the problem, TPR has revealed it’s investigating six people for pension fraud. Estimates show around 370 people in the UK have been persuaded to transfer around £18 million to fraudsters.

An attractive target for criminals

It’s easy to see why criminals are targeting pensions. Pensions can be complex and some savers have been duped into giving away their pension or personal details. On top of this, a pension is often one of the largest sums of money people have saved over their working life, and many don’t regularly check it. As a result, many pension scams go unreported.

The growing levels of fraud and personal losses has led to action and for pension cold calling to be banned. So, what does this mean for you?

Firstly, it offers you more protection. If you get a cold call from someone wanting to talk about your pension, you should hang up. Reputable providers and advisers that you want to work with will not use this form of contact.

But that doesn’t mean you should let your guard down. A ban on cold calling doesn’t mean fraudsters will stop. Giving pension holders the confidence to step back from unsolicited contact is crucial. But it’s not just about cold calls. There are some loopholes criminals will try to exploit. One is to pose as genuine advisers and providers, including:

1. Calling from abroad: The cold calling ban only applies to UK phone numbers. As a result, fraudsters, may call from abroad, allowing them to work around the ban.

Six steps to prevent pension scams

The risk of being targeted by scammers is still very real. These six steps can help you reduce the risk and protect your pension.

1. Understand your pension: The more you understand about your pension, the better you can safeguard it. For instance, scammers may suggest they can help you access your pension before the age of 55. However, this is only possible in very rare circumstances and should be done by contacting your pension provider directly.

2. Don’t make any quick decisions: Pension decisions can affect your income and financial security for the rest of your life. As a result, you should take your time. Reputable professionals will understand this, while criminals will try to pressure you into making a snap decision.

3. Be cautious of all unsolicited contact: While the cold calling ban does offer protection, you may still be targeted by unsolicited contact. Be cautious when responding to any type of communication you’re not expecting.

4. Check the authenticity of who you’re speaking to: The FCA Register offers a simple, effective way to check if you’re speaking to a regulated person or company. Be aware that criminals may use the genuine details of an adviser or firm. To talk to a professional, call directly using the details listed on the register.

5. Ask questions: Scammers rely on you taking them at their word. Asking questions can help you uncover untruths. From investment risk to legislation, genuine providers will be happy to answer your questions, understanding that any pension decision is a big one.

6. Be realistic: The golden rule ‘if it sounds too good to be true, it probably is’, applies to pensions. There’s no simple way to significantly boost your pension savings or access it early. If there were, more people would be doing it.

If you’d like to discuss your pension, whether you think you’ve been targeted by scammers or not, please get in touch. We’re here to help you understand what your pension options are.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.