Pension scams: some victims have lost more than £1m to fraudsters

As more over-55s are targeted, regulators say average amount swindled in 2017 was £91,000

Some victims of pension scams have lost more than £1m to fraudsters, according to new figures, amid a surge in criminal activity targeting the savings of over-55s.

While the average amount swindled out of pension scam victims was £91,000, some people had lost seven-figure retirement nest eggs, said police and regulators.

Victims of such scams – which typically begin with an unsolicited phone call or email – can end up losing their life savings and people have been urged to be on their guard. A TV advertising campaign to warn the public was launched in August 2018 and a ban on pensions cold-calling came into force this month.

Pension scams often involve people being persuaded to transfer or cash in their pension pots and put the money into sometimes exotic-sounding investments. They have been around for many years but there has been a surge in activity since April 2015, when the government introduced reforms giving over-55s more freedom in terms of what they can do with their retirement cash.

The figures have been issued by Action Fraud, which is one of the members of a group called Project Bloom that was set up to tackle the scams. Other members include the Serious Fraud Office, the Treasury and the Pensions Regulator.

Action Fraud said two people had each reported losing £1m or more. However, a Project Bloom spokesman said: “As it is believed that the majority of scam victims never contact the authorities, this may only be a fraction of the total number of people who have handed over such large pension pots.”

Of cases involving larger sums that have come to light, the Pensions Ombudsman has previously ruled on one involving a man who was persuaded to transfer £367,000 out of an NHS pension scheme and put it all into an investment involving self-storage units that supposedly offered an 8%-12% return.

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MPs have previously been told that firms described as “sharks” and “vultures” were preying on British Steel pension scheme members to persuade them to transfer their pensions. Some of these individuals had amassed pension pots of more than £1m.

Pauline Smith, the director of Action Fraud, said: “These statistics prove that the consequences of falling victim to a pension scam can be devastating. Victims can lose their life savings and are left facing retirement with little or no income.”

Regulators say one of the most common tactics is to offer a “free pension review”. Others include a firm or individual unexpectedly getting in touch; promises of guaranteed high returns; offering unusual or overseas investments such as overseas hotels, forestry and green energy schemes; and putting people under pressure to make a quick decision.

The £91,000 average figure relates to 2017, while the £1m cases were between July 2016 and June 2018 but were only made public on Monday.


Rupert Jones

The GuardianTramp

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