According to research from our Tackling the Savings Gap campaign, almost 20% of over-55s believe they have been offered rogue investment opportunities designed to scam them out of their retirement fund, since April’s pension freedoms gave unrestricted access.
The Government estimates that new pension freedoms are available to 400,000 people in the UK. Responding to our latest research, 20% of men aged 55 and over say they have been contacted by people offering investment opportunities that they believe were scams.
Fewer women than men say they have been approached, with only 10% expressing concerns. Overall, 16% of all adults eligible to access their pension fund believe they have been the victim of a scam approach.
This means up to 64,000 people could have been exposed to scams and with HMRC estimating that £2.5 billion has been withdrawn from pension funds since April, scammers could potentially have walked away with £400 million.
Regulators and policymakers are fearful that the new-found freedoms could open the floodgates to scam opportunities and our campaign research exposes the scale of the problem.
Our research also reveals that Wales is the UK’s hotspot for scams, with almost a third of Welsh respondents stating they have been approached, while only 7% in Northern Ireland expressed the same concerns.
We believe the alarmingly high numbers of people and funds that could be exposed, underlines the need for professional advice.
Managing Partner, David Harrison commented, “Pension freedoms remain an excellent and revolutionary policy that we fully support. The question is how can we support consumers who wish to access their pension pot, so that they can make good decisions and don’t fall victim to scams.
“Access to professional financial advice has never been more important to help consumers reach their goals. But the freedoms have come at a time when there are far fewer advisers than we need, lacking the incentive to go out and find new customers and charging fees that put consumers off.
“People with relatively small pots of money are particularly vulnerable because many feel that it is not worth paying for advice, which can run into the hundreds or thousands of pounds. The Financial Conduct Authority and the Treasury must find a way through the Financial Advice Market Review (FAMR) to make advice more accessible and affordable for everyone, or we will simply see more pensions scam victims in the future.”
The FAMR was launched in August this year to examine how financial advice could work better for consumers. It is expected to publish a ‘Summary of Responses’ before March’s Budget.
As part of our campaign to close the UK’s Savings Gap, we welcome the Treasury’s efforts to make professional financial advice more accessible for everyone.