What Are Pension Scams?
A pension scam is an attempt to trick you out of your pension and steal the hard-earned money that you have invested and are saving for use after your retirement.
It usually begins when someone contacts you unexpectedly about a business opportunity, an investment or some other proposal to invest your money. If they say that they can help you access your pension money before you are 55 years old, then it is most likely a scam.
If the person who calls you does not identify himself as a representative of your pension plan and starts asking questions about it, that’s a red flag. He is probably just trying to get information about you and your pension in order to get you to entrap you in a scam. If this happens, you should end the call. Don’t provide any personal or financial information. Instead, alert your pension company immediately.
The scammer will try to tempt you by making a lucrative offer that’s too good to be true, or present a few different ways options for investment, such as a new business. No matter how convincing such offers may sound, you should presume that they are phony. They’re just a ploy to get you to hand over your money.
How to tell if it’s a scam?
First, beware if a company, or an individual, contacts you out of the blue about your money. This can be done by post, a text message, over the phone, or simply by knocking on your door. They will inevitably claim that you can access your pension money before you reach the age of 55 and that they can help you access it. They will also encourage you to withdraw a large sum or even your entire pension in just one go, and that they will invest this money for you and make your money grow much faster.
Most will be impatient when asking you to transfer your money. They will demand it be done as soon as possible and may even send you documents to sign. They will use terms like loophole, loan, pension liberation, one-off investment, and free pension review. They will also offer you an investment plan and claim to be ethical, new to the industry, overseas, and/or unique, among other attributes.
Pension money is something that you have worked hard for all your adult life, which is why you should never let just anyone have access to it. If someone contacts you, check if he is professionally licensed and the company he purports to represent is registered with a government financial regulator. In the UK, that would be the Financial Services Register. In the U.S., confirm that the plan he offers is insured by the Pension Benefit Guaranty Corporation.
Just remember to be careful. Scammers who go after pensions will do whatever it takes to get access to your savings and steal your money. You must learn how to spot all the warning signs so that you will not get scammed.