A total of £2,241,774 has been reportedly lost to pension scammers since the start of 2021, according to figures from Action Fraud, with the average loss this year totalling £50,949, more than double the average in 2020 (£23,689).

The figures were released alongside research from the Financial Conduct Authority (FCA) that found savers were nine times more likely to accept advice from someone online than from a stranger in person.

It also found that savers 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 this, the FCA has urged savers to “flip the context” and imagine what they would do if they received pension advice from a stranger while enjoying a “quiet pint in the pub”, arguing that putting warning signs into an everyday offline setting can make scams easier to spot and avoid.

However, whilst more than two-thirds (68 per cent) of pension holders claimed they were confident that they could spot the signs of a pension scam, only 28 per cent realised a free pension review was a sign of a scam, while “just 40 per cent” knew to be wary of opportunities to transfer your pension.

It also found that 50 per cent of pension holders would be unlikely to make an ‘impulse buy’, although more than a third (36 per cent) of pension holders were unable to recognise time-limited offers as a sign of a scam.

The FCA highlighted this as “particularly concerning", warning that overconfidence can lead to pension savers letting their guard down and failing to check if the firm they are dealing with is on the FCA warning list.

The pandemic has also impacted attitudes towards pension scams, as more than a quarter (28 per cent) of pension holders felt more at risk of a pension scam now compared to before the Covid-19 pandemic, with nearly two-thirds (65 per cent) of this subset concerned that scammer tactics have become more sophisticated and harder to spot.

Commenting on the findings, FCA executive director of enforcement and market oversight, Mark Steward, commented: "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."

The Pensions Regulator (TPR) executive director of frontline regulation, Nicola Parish, has also highlighted the latest figures showing the average losses to pension scams as a “shocking reminder of the threat to savers from unscrupulous criminals”.

She stated: “Scheme trustees, administrators and providers have a vital role to play to beat crooks who prey on savers. That’s why we are calling on all those who run pension schemes to sign up to our Pledge to Combat Scams campaign.

“More than 200 have signed up so far, but we need more to take action now, and always report suspected scams to Action Fraud or by calling 101 in Scotland.

“Savers considering what to do with their pension pots should take advantage of all the guidance available to protect themselves, such as on the ScamSmart website and the new MoneyHelper website – a free online resource run by The Money and Pensions Service bringing together Pension Wise and The Pensions Advisory Service.”

AJ Bell Senior analyst, Tom Selby, warned that whilst it was “shocking” that £2m has been lost to pension scams so far this year, “in reality this is the tip of the iceberg”.

He explained: “Most scams occur outside of pensions nowadays, with retirement savers over age 55 who can access their retirement pot flexibly one of the prime targets for fraudsters.

“We also know that the coronavirus pandemic has led to an increase in vulnerability, with more than 27 million adults in the UK demonstrating characteristics of vulnerability such as poor health, negative life events, low financial resilience or low capability.

“Depressing as it is, scammers prey on this vulnerability to try to fleece people out of their hard-earned retirement savings.

“While steps have been taken to protect pension savers, government and regulatory interventions can only do so much. It is vital individuals take responsibility, be careful before parting with their money and take the time to know the tell-tale signs of a scam.

“The FCA’s message to savers to ‘flip the context’ when they receive an online offer is absolutely right. People need to treat any unsolicited approach about their finances – be it in person or online – with a healthy dose of scepticism.”

Quilter head of retirement policy, Jon Greer, highlighted the FCA's ScamSmart campaign as "vital", pointing out that the research suggests that people incorrectly assume that they can trust what they see online to be genuine, when it may be a scam.

"Awareness is one of the most powerful weapons against scammers. Consumers need to be aware of the latest tactics used by scammers, and they need to be aware of the steps they can take to keep themselves safe and protect their hard-earned savings," he stated.

“Spotting a pension scam can be tricky and it is absolutely critical for savers to have their guard up when approached with an offer to transfer into unusual assets promising outlandish returns, or take advantage of a scheme offering early access."

However, Greer warned that it is not only fraudulent pension transfers that people need to be aware of, noting that when people take tax free cash they often search online for what to do with it, with this partly fuelling the rise in investment scams.

“And awareness alone is not the answer. Consumers need more protections from pension and investment scams when they go online. The way we regulate adverts in newspapers and adverts online are worlds apart," he argued.

"It’s time the government added fraudulent online advertising to the Online Safety Bill so that technology companies face legal requirements to tackle the scams that appear on their sites.”

This was echoed by Aegon head of pensions, Kate Smith, who noted that the latest figures "unfortunately" come shortly after the government's rejection of the Work and Pension Committee's recommendation that fraud facilitated by online advertising be tackled in the forthcoming Online Safety Bill.

She clarified: "Although disappointing, this hasn’t been entirely kicked into the long grass, as the government has committed to consult on this later this year looking at how online advertising is regulated.

"The government needs to move quickly on this, as clamping down on the rogue online advertisers trying to separate people from their money will be part of the toolbox to protect people’s pension savings from scams.”

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