Pension: Urgent action needed to protect Britons from scams – how to keep your money safe

PMQs: Johnson says UK ‘must be vigilant’ for pension scams

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Pension scams encourage individuals to part with their hard-earned cash, often with the promise of significant returns or early access to funds for retirement. They can be particularly costly, with some scams proving ruinous and leaving Britons with no source of income for the later life they had originally planned. Today, MPs have warned there must be a crackdown on the issue, especially on the tech firms it has been asserted could be benefitting from the issue.

The Work and Pensions Committee has said global tech organisations must be held to account for hosting pension scam adverts.

These adverts, if clicked upon, could go on to defraud Britons out of thousands of pounds, demonstrating their danger. 

The Government has now been called upon to protect pension savers, and ensure companies do not benefit from scams of this kind. 

Stephen Timms, Chair of the Work and Pensions Committee, revealed the extent of the issue as it is visited upon unsuspecting Britons.

He said: “The pension freedoms brought more choice for savers on how to use their pension pots, but the reforms have also opened up a whole new world of opportunity for scammers and fraudsters.

“At the same time, a woeful lack of online regulation has helped them reach more people than ever before.

“The result is an online free for all, where scammers can advertise with impunity while the tech giants line their pockets from the proceeds of their crimes.

“There must now be parity across the media to ensure all adverts are regulated and the Government should use its Online Safety Bill to act.”

Mr Timms highlighted that “any one of us” could end up falling victim to a sophisticated pension scam, the effects of which are devastating.

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It is estimated that £10billion has been lost to pension scams since 2015, research from the Pension Scams Industry Group claimed.

However, there are fears the situation is currently becoming worse rather than getting better.

This is due to the fact scammers are attempting to take advantage of new situations, such as COVID-19, to capitalise on uncertainty.

Such events could present new opportunities to criminals, and thus Britons must be on their guard to protect themselves. 

Rocio Concha, Director of Policy and Advocacy at Which?, commented on the matter.

She said: “This report is a damning indictment of the approach of tech giants like Google to tackling scams.

“These companies have some of the most sophisticated technology in the world, yet they are failing to utilise it to prevent scammers from abusing the platforms by using fake and fraudulent content on an industrial scale to target victims and devastate lives.

“The case for including scams in the Online Safety Bill is overwhelming. Online platforms must be given a legal responsibility to identify, prevent and remove fake and fraudulent content form appearing on their sites and give their users the protection they deserve.

“The Government must not miss the opportunity to act now.”

The Pensions Schemes Act 2021 is set to allow people’s right to transfer their pension scheme to be restricted where there is a sign a pension scam could be taking place.

This could help to financially safeguard those who are able to work out that a scam is taking place mid-transaction.

However, individuals may also wish to be proactive about protecting themselves and their hard-earned cash.

Many pension scam tactics could be familiar to Britons, and often work off the same pattern.

Instances include promises of high or guaranteed returns, access to one’s pension before the age of 55, or pressure to act quickly on supposedly “limited offers”.

The Pensions Regulator has offered its simple steps to help ensure individuals stay protected.

Firstly, if a person is contacted out of the blue about their pension, they are urged to be wary of who they are dealing with.

Next, individuals areaways encouraged to check who they are dealing with by cross referencing the Financial Conduct Authority (FCA) Register.

Those who do not use an FCA-authorised firm are unlikely to be able to use the Financial Services Compensation Scheme (FSCS) if things go wrong, so this should be considered.

As a third point, pension savers are actively encouraged to take their time to consider a deal and avoid being pressured – if a deal seems too good to be true, then it probably is.

Finally, impartial information and advice can always help people to weigh up their options and check how best to manage their retirement.

Do you have a money dilemma which you’d like a financial expert’s opinion on? If you would like to ask one of our finance experts a question, please email your query to [email protected]. Unfortunately we cannot respond to every email.

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