22 years of pension savings gone in 24 hours

Victims of pensions scams could lose 22 years’ worth of savings within 24 hours, according to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).

New analysis as part of the regulators’ joint ScamSmart campaign reveals that it could take 22 years for a saver to build a pension pot of £82,000 – the average amount victims lost to scams in 2018. But despite this, many savers could be at risk of falling for scammers tactics within 24 hours. New research reveals that almost 1 in 4 people (24%) surveyed, admitted to taking 24 hours or less to decide on a pension offer.

Worryingly, overconfidence could also lead to savers missing the signs of a scam. Despite nearly two-thirds (63%) saying they are confident making decisions about their pension, the same proportion (63%) would trust someone offering pensions advice out of the blue – one of the main warning signs of a scam.

Further still, the more highly educated the person, the more likely they are to fall for a pension scam. Those with a university degree are 40% more likely to accept a free pension review from a company they’ve not dealt with before, and 21% more likely to take up the offer of early access to their pension pot. Both common scam tactics.

Pension fraud can be devastating. Victims can be left facing retirement with limited income, and little or no opportunity to build their years of savings back up. As a result, the regulators are warning savers to get to know the warning signs of a scam, be ScamSmart and always check who they are dealing with before making a decision on their pensions. 

Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said: 'We know many people have big plans for their retirement, whether it’s seeing new places, learning new skills or helping their families out financially. Pension scammers destroy those dreams, often forever. So be ScamSmart. Reject unsolicited approaches offering ‘help’ with your pension and get advice from an FCA authorised firm before making big changes to your pension fund. Make sure your lifetime savings stay yours.'

Nicola Parish, Executive Director of Frontline Regulation, TPR, said: 'Pension scammers ruin lives, stealing away decades’ of savings with professional-looking websites, ‘expert’ advice and an easy manner making it tough to spot the fraud. But once you sign on the dotted line, often there’s no second chance. Scams can happen to anyone, so before making any decision about your pension, take your time, be ScamSmart and always check who you are dealing with.'

Honey Langcaster-James, psychologist, added: 'Scammers employ clever techniques, such as seeking to establish ‘social similarity’ by faking empathy and a friendly rapport with their victims. They can win your trust in a short space of time and by engaging with them you leave yourself vulnerable to losing a lot of money very quickly. People need to know how to spot the signs of a scam so they don’t fall for psychological tricks.'

Pension savers can test how ScamSmart they are by taking a quiz on the ScamSmart site. Visit www.fca.org.uk/scamsmart to find out more.

The regulators recommend four simple steps to protect yourself from pension scams:

  1. Reject unexpected pension offers whether made online, on social media or over the phone
  2. Check who you’re dealing with before changing your pension arrangements – check the FCA Register or call the FCA helpline on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA
  3. Don’t be rushed or pressured into making any decision about your pension
  4. Consider getting impartial information and advice

The Pensions Advisory Service provides free independent and impartial information and guidance. If people aged 50 or over require free independent advice, they can contact the government-backed Pension Wise service. To book a free appointment, visit www.pensionwise.gov.uk/en.

Notes to editors

  1. Last year, 180 people reported to Action Fraud that they had been the victim of a pension scam, losing on average £82,000 each. The true number of victims is likely to be higher as scams often go unreported and those affected may not realise they have been scammed for several years. Last year, 180 people reported to Action Fraud that they had been the victim of a pension scam, loosing on average £82,000 each. The true number of victims is likely to be higher as scams often go unreported and those affected may not realise they have been scammed for several years.
  2. Pension pot calculation based on a starting salary of £28k, with annual pay rises of 2%, taking into account 8% contributions (auto-enrolment) and a 3% per annum fund growth. This would give pension pots of: 
Years saving Pot size
5 years £12,400
10 years £28,000
20 years £71,700
30 years £138,000
40 years £236,000
  1. All figures, unless otherwise stated, are from two Censuswide commissioned surveys:

  • 2,012 adults aged 45-65 with a pension. Fieldwork was undertaken between 24-28 June 2019. The survey was carried out online. 
  • 2,005 adults aged 45-65 with a pension. Fieldwork was undertaken between 8-10 October 2019.
  1. 24 hours reference based on research showing 1 in 4 (24%) admitted to taking 24 hours or less to decide on a pension offer.
  2. Comparisons made between respondents that are ‘highly educated’ have been compared to the base figure of all respondents (including those that are highly educated).
  3. The latest ScamSmart pension scams advertising campaign launched on 1 July. The advertising includes TV, radio, online video and banner ads, and paid search.
  4. The ScamSmart website, gives consumers tips on how to spot the techniques used by fraudsters and hosts the FCA Warning List. The Warning List is a list of firms and individuals that the FCA knows are operating without its authorisation. The web tool helps members of the public search this list, find out more about the risks associated with an investment or pension opportunity and the steps they can take to avoid scams.
  5. A ban on pension cold calling came into force earlier this year. Firms that break the rules could face penalties of up to half a million pounds.
  6. The FCA and TPR are members of Project Bloom. Bloom was created in 2012 and brings together government departments, agencies, regulators, law enforcement bodies and representatives of the pension industry to tackle pension scams. The partners are The Pensions Regulator, the Financial Conduct Authority, the Department for Work and Pensions, HM Treasury, the Serious Fraud Office, City of London Police, the National Fraud Intelligence Bureau, Action Fraud, the Pensions Advisory Service, the Pensions Scams Industry Group, the Money Advice Service, the Information Commissioner’s Office, the Insolvency Service, Pension Wise, National Trading Standards and the National Crime Agency.
  7. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  8. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this, it has three operational goals: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system, and to promote effective competition in the interests of consumers. Find out more information about the FCA.
  9. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

Page updates

06/08/2020: Link changed fixed broken link to ScamSmart website