A campaign designed to raise awareness into the increased risk of pension scams has been launched by the Financial Conduct Authority (FCA).
Following new pension freedoms announced in last year’s budget which allow savers to withdraw unlimited amounts from their pension pots, new industry research has revealed that pension scheme members were three times more likely to be approached by firms hoping to cash in on the new freedom and choice legislation.
The start of pension freedoms could be the ‘very moment that unscrupulous fraudsters’ strike, the FCA said in an update to its ScamSmart campaign.
Sarah Hamilton, Senior Pensions Consultant at Aon Employee Benefits said: “Whilst new flexibilities are good for DC investors, they will also be good for unscrupulous individuals looking to scam money out of pension savers. We welcome any campaigns that will help highlight to DC investors the potential scams out there that could result in them losing their retirement nest egg.”
The FCA campaign focuses on three key recommendations to ensure savers remain ScamSmart:
- Reject cold calls
- Check the FCA Warning list
- Seek impartial advice from those regulated by the FCA.
Speaking in relation to the new campaign, FCA Chief Executive Martin Wheatley said: “The new pension flexibilities will offer people the freedom to make choices that suit their plans for retirement. But this is exactly the time when people need to be alert to the dangers of scammers offering opportunities that are too good to be true."
Hamilton added: “Most scams will involve DC investors transferring their pension pots to schemes to access these flexibilities, often with promises of high investment returns and misleading information that their money is ‘safe’. They also often incur high charges and the possibility of highly punitive tax charges.”
According to Hamilton, Aon’s latest product, Bigblue Touch, provides a safe and secure solution for individuals wanting to take advantage of the new pension freedoms but in a fully-compliant and regulated way.
“On reaching age 55, Bigblue Touch members can access the full flexibilities without the need to transfer to a scheme with high charges,” she said. “Throughout their journey, members will have access to tools and guidance that will help them understand and plan their retirement outcomes.”
Aon UK Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Registered number: 00210725. Registered Office: The Aon Centre, The Leadenhall Building, 122 Leadenhall Street, London EC3V 4AN.