Pension scams have wiped out approximately £1 billion from people's retirement savings plans and, as a result, a total ban on cold-calling has come into force.
The ban covers any unsolicited contact via text and email; however, this comes as cold comfort to those who have already lost large sums of their savings to fraudsters and scammers.
Eight years ago, Peter Trigwell received a text message from a sales company offering him a free pension review. Though Mr Trigwell had never heard of the company, the idea of a free review sounded like a good idea. After all, his pension was not performing well, so it seemed like he had nothing to lose.
Ultimately it led him to losing more than £60,000 of his retirement savings.
Peter agreed to a face-to-face meeting and a free review, and was visited at his home in Sunderland by a man who called himself Simon Walton – who looked and sounded very professional.
Mr Walton brought with him a large selection of brochures and testimonials which made his company appear solid and established.
Peter was told he could expect a 9% annual return for the first five years and 12% a year thereafter. He could not have been more delighted.
But, not surprisingly, things did not go at all as well as he had been told.
His pension pot was raided, and funds were put into a high-risk investment in overseas property.
In 2014, Peter was told that the company had gone bust and it was likely he had lost all of his money.
Peter, 52, had this to say:
“I was assured from the outset that my money would be invested in a low-risk scheme that was redeveloping old housing stock in the UK which they were selling on at a healthy profit. I had no idea that this was a complete lie.
“I’m not a gambling man, so the idea that the scheme – that was supposedly ‘low risk’ – was of great importance to me, so I signed up. I can’t believe how stupid I was.”
Peter added: "I’m 52 years of age and am going to have to work long hours and weekends right up to my retirement to try to make up for the money that I effectively just threw away.”
He says the cold-calling ban is welcome but believes the scammers will simply find another way to con people out of their savings.
Scammers usually contact their victims out of the blue via phone, text or email. They often offer a free pension review or an investment opportunity to their potential victims.
Many fraudsters claim they can 'unlock' pension pots early – before you reach age 55 – which is illegal except in very rare or unusual circumstances. Of course, what they fail to mention is that the ‘investor’ could be liable to pay 55% tax to HM Revenue and Customs if they did so.
It is estimated that £27 million a month has been lost to these scams since rules for accessing pension money were relaxed in 2015.
But this figure may well be an underestimation, as many victims do not report the fraud and even more are unaware that they have been scammed until they try to access their pension cash in the future.
The new ban makes it clear that any unsolicited contact about a person's pension is illegal; however, this makes little difference to those fraudsters who operate under false aliases and work for non-existent companies.