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05

Pension freedoms leave 'millions of pounds more accessible to scammers'

Open-access content Monday 18th May 2015 — updated 5.13pm, Wednesday 29th April 2020

A third of people aged 55 or over have been contacted by someone looking to sell them a “potentially dodgy pension product”, according to Which?.

Which? carried out a survey of 2,000 people aged 55 or over and found two in five were contacted in the months before April's pension reforms. The organisation said the figure was double the number who said they were contacted during the whole of 2014 (20%). 

According to Which?, the most common sales pitches were offers of investment opportunities (21%) and a free pension review (16%). A minority (13%) of people were approached with offers to "unlock your pension" and another 13% were told they could access their pension pot early.

More then half  (52%) of respondents were contacted by telephone while 37% were contacted by post and another 36% by email.

The organisation said half the respondents said they were able to identify a legitimate pension investment, but nearly four in 10 (37%) felt they could be tricked into a scam. 

As part of Which?'s campaign to help retirees benefit from their pension savings, executive director Richard Lloyd is calling for the government and regulators "to do more" to raise awareness and prevention of pension scams and unregulated investment schemes. 

Lloyd said: "Recent pension reforms have given people welcome freedom to access their money as they wish, but this has also made millions of pounds more accessible to scammers. 

"Anyone who is approached by a company they're unsure about should do some research into the firm and be careful not to rush into any decisions. We want the government and regulators to do more to warn people about these types of tricks and do all they can to stamp out the sharks behind them."

Which? outlined a few recommendations to the government including establishing a low-cost government-backed drawdown provider open to all consumers, capping drawdown charges and safeguarding savings in drawdown schemes that go bust.  

This article appeared in our May 2015 issue of The Actuary.
Click here to view this issue
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