Majority of savers unable to identify most common pension scam methods

PensionBee has stressed the need for greater pension scam awareness, as its research found almost two thirds of savers were unable to correctly identify some of the most common scam tactics.

A survey by the firm revealed ‘early pension access’ and ‘free pension advice’ to be the two scam tactics least likely to be identified, despite being amongst “the most prolific and costly scams for savers”.

Almost a third (31 per cent) of savers thought that free pension advice was either unlikely, or highly unlikely to be a pension scam, while a further 32 per cent were unsure and stated that it was "neither likely nor unlikely" to be a scam.

Meanwhile, a further 18 per cent of savers thought that early access was either unlikely, or highly unlikely, to be a pension scam, with almost a third (31 per cent) unsure.

The firm also found that just 42 per cent of respondents were able to identify the minimum age at which they can begin to withdraw their retirement savings, arguing that this shows a lack of awareness as to how long a pension is designed to last.

It warned that this could not only see savers running out of money during retirement, but could make them more vulnerable to scammers who lead them to believe that accessing a pension at 55 is a ‘perk’ exclusive to them.

Encouragingly though, guaranteed high returns was a red flag for the majority of respondents, with 82 per cent expecting this to be a scam rather than a genuine offer.

Furthermore, just one per cent of savers viewed pension liberation offers or the offer of a bonus to invest before a certain date as “highly unlikely” to be a scam.

A fifth of respondents however, did not expect scammers to target them by phone or email (21 per cent), despite what PensionBee described as a “huge increase in scams of this nature in recent months”.

This proportion was slightly higher for those aged over 50, with 88 per cent expecting to be targeted by scammers via a phone call, compared to just 76 per cent for those 50 and younger.

Instead, those under 50 showed more concerns around digital platforms, with 57 per cent expecting to be approached via a website, compared to just 46 per cent for older savers.

The biggest disparity in awareness though, was when considering the risk of in-person scams, with just 17 per cent of those aged over 50 aware of this tactic, despite previous Age UK finding that older people are often targets of doorstep scams.

The majority (84 per cent) also thought that scammers were usually targeting the elderly, while over half expected savers with large pension pots (62 per cent) and savers who are retired (61 per cent) to be the targets for a pension scam.

Meanwhile, less than a third (32 per cent) expected to be targeted by a pension scam if they are working, or if they have a small pension pot.

PensionBee emphasised however, that whilst scammers may choose to target the more vulnerable in society, they can target anyone, highlighting that coronavirus-related scams, for instance, are designed to exploit savers of all types.

The firm also noted that the majority of people “tend to see people in other situations as more likely to be scam victims", highlighting that 61 per cent of employed respondents thought they were less of a target than those who are retired.

It warned that this could result in a "false sense of security" when it comes to identifying pension scams, echoing previous research from The Pensions Regulator, which found that the more highly educated a person, the more likely they are to fall for a pension scam, "due to overconfidence".

Commenting on the findings, PensionBee chief executive, Romi Savova, added: “It is concerning that so many savers are unaware of the common tactics employed by scammers.

“Any one of us could fall victim to a scam and the coronavirus pandemic has only heightened that risk.

“People should be extra vigilant and refuse to share any sensitive information about their pension, or indeed anything else, with people they do not know.

“It is clear that the pensions industry must do more to educate savers and take a stand against scammers.

“The Scam Man & Robbin’ game is a great start, but we must continue to work together to find new and innovative ways to play the scammers at their own game.”

Scam Man & Robbin' game, designed to tackle pension scams, was played over 1,000 times in the first week following its launch on 29 April.

It was created by PensionBee, AgeWage, Smart Pension and Nutmeg, alongisde JMAN Group.

    Share Story:

Recent Stories

Managing volatility
In the latest Pensions Age podcast, Laura Blows speaks to Cambridge Associates head of European pension practice, Alex Koriath, about the Covid-related market volatility and how pension funds can prepare for the challenges ahead

De-risking options for pension schemes
In this latest Pensions Age podcast, Linklaters' Sarah Parkin talks to Laura Blows about the wide range of choice available to pensions schemes for the partial, or full, removal of their risks

Risk transfer opportunities
Laura Blows speaks to Lisa Purdy, Head of Fiduciary Distribution at Legal & General Investment Management and Gavin Smith, Pricing and Execution Director - UK PRT at Legal & General, about the impact of the recent market volatility on the bulk annuity and risk transfer market and the potential opportunities for the future

Bulk annuities during coronavirus
Laura Blows speaks to Just business development manager Prash Mehta about the impact of coronavirus on transactions