The FCA has launched a new ScamSmart consumer campaign because of concerns financially-stretched consumers will be more likely to withdraw pension savings in the near future.

The FCA commissioned Opinium to survey just over 1,000 consumers aged 40 and over with workplace and private pensions to learn more about the risks.

It found that a quarter of consumers were considering withdrawing pension savings to cover the soaring cost of living. It cited the case of one woman had been scammed out of £45,000 in pension savings while trying to look after her terminally ill mother. 

The FCA study showed:

• A quarter of consumers may withdraw pension savings earlier than planned to cover the cost of living, making them vulnerable to ‘misdirection’ scam tactics

• Scammers are distracting victims with the promise of higher returns, preying on money concerns and building up trust

• Latest retirement income market data reveals that the number of pension plans accessed for the first time in 2021/22 increased by 18% to 705,666 compared to 596,080 in 2020/21

The FCA says pension savers are becoming particularly vulnerable to scammers using ‘misdirection’ tactics to con victims.

Among the most commonly used 'tricks' were:

• The offer of a free pension review
• Higher returns, where scammers will 'guarantee' better returns on pension savings
• Help to release cash from a pension even though a consumer is under 55
• High-pressure sales tactics, often using ‘time-limited offers’ or sending a courier to the door while victims sign documents
• Unusual investments – which tend to be unregulated and high risk
• Complicated structures where it isn’t clear where money will end up
• Arrangements where there are several parties involved (some of which may be based overseas) all taking a fee, which means the total amount deducted from a pension is significant
• Long-term pension investments – which mean it could be several years before savers realise something is wrong

The FCA research found that 44% of consumers would take up the offer of a free pension review. 

The study also found that 17% of over 65s are still in work because they cannot afford to retire on their current pension and over a third (37%) are not confident they have enough in their pension to last their whole retirement.

The FCA warned that scammers will often prey on their victims’ poor knowledge: over half of consumers (54%) said they did not feel confident in growing their pot and 38% do not feel confident in how pensions work.

Many would also be falsely 'reassured' if a potential scammer getting in touch out of the blue could show them third-party verification – such as a separate individual who can (falsely) vouch for them (46%) or had positive reviews of their service (31%), despite the fact scammers are becoming increasingly skilled at producing fake websites.

The FCA has cited a real life case to support its campaign:

Pauline Padden, 58, was looking after her terminally ill mother when she received a text message offering her a better deal on her pension and some cash in return for transferring her pot. Pauline was promised higher returns on her pension savings if she invested in a long-term hotel build in the Caribbean. Six months later, she was devastated to receive a letter explaining she had been the victim of a scam and had lost £45,000 in pension savings.

She said: "At the time I was incredibly vulnerable. I was busy looking after my terminally ill mother and my 3 children. The scammers capitalised on my vulnerability and robbed me of the prospect of ever retiring. I was only trying to make my retirement easier but instead these scammers ruined my life.

"I still don’t know if I’m ever going to be able to get my savings back and will probably have to keep working until I am no longer fit to do so. I just hope I can help to raise awareness of the signs to look out for so that others never have to go through what I’ve had to deal with over the last 9 years."

The FCA is calling on all consumers to check the information on the ScamSmart website, including the Warning List, before making any decision about their pension. 

Mark Steward, executive director of enforcement and market oversight, FCA, said: "The rising cost of living is affecting people at all savings levels, and pension scammers are taking advantage of this. Pension scammers are tricking victims with false promises of a better lifestyle in retirement, more money to support a better life in hard times. Like the magician’s trick, thousands can disappear in seconds, but this time the consequences can be devastating ones.”

• The Financial Conduct Authority’s consumer research was conducted by Opinium, with 1,009 UK adults aged 40 and over with a workplace or private pension.