Pension savers, at the moment, must be directed to Pension Wise by their scheme providers when they want to access their savings. However, today the DWP set out new proposals to require more stringent checks down the road.
Guidance of this nature may be more crucial than ever as recent data from Action Fraud showed pension scam victims are losing an average of £50,000, double last year’s figure of £23,689.
Additionally, research released in early July from the FCA detailed scammers have targeted over £2 million worth in pension pots in the last five months alone.
The FCA warned pension holders are nine times more likely to accept advice from someone online than they would from a stranger met in person.
On top of this, they are five times as likely to be interested in a free pension review from a stranger online than someone in their local pub.
In light of these findings, Mark Steward, the FCAs Executive Director of Enforcement and Market Oversight, urged retirees to be aware of digital risks.
He said: “Imagine a stranger in a pub offering free pension advice and then telling you to put those savings into something they were selling. It is difficult imagining anyone saying yes to that.
“It’s no different online. Whether you’re on social media or checking your emails, if someone offers you free pension advice, ‘flip the context’ and imagine them doing the same thing in real life. Stop and think how you would react.
“Fraudsters will seek out every opportunity to exploit innocent people, no matter how much they have saved.
“Check the status of a firm before making a financial decision about your pension by visiting the FCA register. Make sure you only get advice from a firm authorised by the FCA to provide advice, before making any changes to your pension arrangements.”
Emma-lou Montgomery, an associate director for Personal Investing at Fidelity International, also provided additional guidance on this.
Ms Montgomery said: “Fraudsters have no shame when it comes to parting people from their hard earned money and life savings can disappear in the blink of an eye. Scammers have successfully made off with over £2 million of people’s pension savings in just five months, that’s nearly £15,000 every single day.
“The prevalence of scams has only worsened through the pandemic with unscrupulous individuals taking advantage of market volatility and uncertainty to draw people away from trusted firms. Employing increasingly sophisticated tactics, scams can be difficult to spot but there are some tell-tale signs that should always raise a red flag. Pressure to make decisions quickly, the offer of free money or something that seems too good to be true are clear warning signs.
“If people are looking to make changes to their pension arrangements, they have to be cautious and do it the safe way. If they are unsure, thorough research and seeking advice from an impartial source, such as a regulated financial adviser, are both incredibly important. Only then, once people have all the information for their specific needs and circumstances, should a decision be made.”