Crooks have stepped up their efforts following the introduction of new rules in April 2015 which allow savers to release a cash lump sum from their pension pot once they turn 55.
These sweeping reforms have proved popular with pensioners, as they now have more choice about what to do with their retirement savings, rather than having to buy an annuity (income for life).
The problem is, older individuals are being bombarded with bogus investment opportunities via phone calls, emails, texts, and letters through the post.
Figures from Action Fraud show that losses from pension liberation fraud soared to £4.7 million in May 2015, up from £1.5 million in April 2015.
While thousands of scams have already been thwarted, there are fears many more could slip through the net.
Here are some of the warning signs to look out for.
Be vigilant if you are offered a review
If you get a call out of the blue offering you a free pensions review, you need to think very carefully before accepting, as it could be a scam. No reputable organisation would ever approach you in this way.
If you agree to a review, you could then receive a visit in your own home from someone claiming to be a financial adviser.
However, that smooth-talking trickster may then try to coerce you into signing paperwork that will give them access to your financial details.
If someone cold calls you offering a pension review or some other form of help, you should hang up right away.
Read Paul Lewis' guide to avoiding pension scams
Watch out for fraudulent offers
Criminals are also trying to lure pensioners into handing over their pension pots, by offering to put their money into dubious “get-rich-quick” schemes, such as fine wines or overseas property.
If someone contacts you promising a high rate of return from a “unique opportunity,” you need to treat this with caution.
While decent returns may sound very appealing at a time when rates on traditional savings accounts are at rock bottom, the old adage remains: if something sounds too good to be true, it probably is.
In some cases, the investment in question may have never even existed.
What is a pension liberation scam?
Be wary if you are given a deadline
If you are told you must provide your details or sign paperwork within a short time-frame, this should also set the alarm bells ringing.
Think carefully before believing claims about early access
Some cons involve fraudsters offering to help older savers access their pension before the age of 55.
While this may sound tempting, if you agree to this, you could then find yourself victim of a scam, where your money is released into a fraudulent or non-existent scheme.
On top of this, you could also then face a penalty charge for accessing your savings too early – as well as a hefty tax bill.
Have you heard about the petrol and rings scam?
Ignore promises to trace lost pensions
If someone contacts you offering you to help trace a lost pension or get you a statement, you need to tread very carefully, as this is likely to be a con.
Read our guide to tracing old pensions
Beware of phishing techniques
Some scammers are trying to con people out of their money using phishing or vishing techniques.
These cons involve fraudsters contacting people by email or over the phone, and getting victims to hand over their personal data, such as their National Insurance number and bank account.
If you do give fraudsters access to your personal and financial information, there is also a risk they will use these details to steal your identity. Having done this, they may try to apply for loans and other forms of credit in your name.
Read our guide to spotting a scam email
What are the implications?
If you fall victim to any one of these elaborate scams, there is a risk your lifetime savings could be destroyed, leaving you with little – or nothing – in your pension pot for retirement.
Take steps to protect yourself
- Be very wary of unsolicited approaches, such as phone calls or text messages. Do not click on links in emails, or you could end up at a fake website.
- Think twice before giving out personal information, such as your date of birth, address, bank account details or PIN number to someone you don’t know.
- Never let anyone rush you into making a decision. If you feel rushed by a pushy adviser who is urging you to speed up when signing paperwork, do not continue. This could be a good indication that it is a scam.
- Don’t trust salespeople who won’t give you copies of documentation.
- Treat any mention of guaranteed returns, legal loopholes or unique investment opportunities with caution.
- Check if the company contacting you is regulated by the Financial Conduct Authority (FCA) or The Pensions Regulator.
- Check out the FCA’s ScamSmart warning list. This gives the names of investment schemes that are known scams.
- If you are unsure about an investment that you have been offered, contact The Pensions Advisory Service on (0300) 123 1047. You can also contact Citizens Advice.
- If you have already accepted an offer you think is a scam, report it to Action Fraud. Visit the Action Fraud website or call (0300 123 2040).
- For more information on pension scams, visit the Pension wise website or call (0330 330 1001).
Use Experian's free 30-day trial to check your credit report for unusual activity and unauthorised credit that has been taken out in your name