Pension scam victims 'lost £91,000 each'

Pension scam victims lose an average of £91,000 each as fraudsters see the potential for looting savings pots.

One victim, Jennifer Ringstead, who lost over £50,000, said she was "angry" she had not been compensated and would have to start saving from scratch.

City regulators are now launching a new campaign aimed at alerting people - especially those in their 40s, 50s, and 60s - to the risk of pension fraud.

They want people to check any pensions firm they deal with is authorised.

The scam starts with an unexpected call, text, social media approach or email - offering a free pension review, or a way to make attractive returns on pension savings.

But the money may be simply stolen or transferred into a high-risk scheme completely inappropriate for retirement savings.

Many offer eye-catching returns or high-rolling investments in hotels or green energy schemes that never materialise, or instead lead to losses.

It is thought that only a minority of pension scams are ever reported.

Many of those losing money may only have relatively small pension pots, but it may be their entire life savings.

Mrs Ringstead and her husband, from the Vale of Glamorgan, invested - and lost - their pension pots which, together, totalled more than £50,000. They were tricked when their finances were already overstretched.

She said that the story the fraudster told was convincing and came when they were at their most financially vulnerable.

"He was just perfect. I did not think for a second that anything was amiss. I asked questions, he had the answers to everything," she said.

"I still feel very angry. I feel very angry that we haven't had any compensation and that at our age, we are having to start [saving] from scratch.

"That doesn't look great for the future."

Mark Steward, director of enforcement at City regulator the Financial Conduct Authority (FCA), said the new campaign run by the FCA and The Pensions Regulator, which features a TV advert first airing on Tuesday, will aim to put a stop to cases like this.

"We can enforce. We can investigate. We can prosecute. We can continue doing all those things, but they are hard and they take time and they do not give people the money back that they have lost," he said.

"Prevention is better than cure, so we want to give people some handy tips to be aware of, particularly if they are being confronted by fraudsters."

Pension companies should warn people about scams if a transfer is requested to a scheme that appears to be unauthorised.

Source: ScamSmart

Tom Selby, senior analyst at AJ Bell, said the fraudsters had changed their tactics since people aged 55 and over were given greater access to their pension pots.

"Since April 2015, when the pension freedoms were introduced, fraud activity has increasingly and unsurprisingly targeted over 55s, often luring people to part with their retirement pot by promising huge returns over a short period of time," he said.

Campaigners hope the government will introduce a pensions cold calling ban that was first announced nearly two years ago.

After the latest consultation, the new ban is scheduled to be put before Parliament in the autumn, according to the government, but is unlikely to take effect until next year.

"We're committed to introducing a ban on pensions cold calling as quickly as possible. Following debates in Parliament, and having considered evidence from the industry, we have published a short consultation on the draft legislation to ensure it is as effective as possible. We intend to lay the required regulations before Parliament this autumn," a Treasury spokesman said.