Financial scams are nothing new, but the introduction of pension freedoms has provided thieves with new opportunities. How do you spot scams and stay safe?

Scammers are after your money and are employing increasingly advanced tactics to get you to hand it over.

Pension freedoms, which came into effect two years ago, have allowed the over 55s to access the money in their pensions funds. This has led to a rise in the number of fraudsters trying to get their hands on your pension pot. Shocking figures from the Financial Conduct Authority (FCA) last year showed that victims of investment fraud lose an average of £32,000.

But it’s not just your retirement savings scammers are after: it’s also remote access to your computer, your online banking passwords, and your personal details. The Office for National Statistics reported there were an estimated 3.6 million cases of fraud and two million computer misuse offences in the 12 months up until September 2016.

How to spot a scammer

Unsolicited phone calls, texts or emails about your pension are nearly always scams. Scammers will often claim they’re from Pension Wise or another government-backed body. But, in reality, these organisations would never cold call you.

Scammers might offer a ‘pension review’ and then suggest you move money to an alternative or unregulated investment scheme. The scheme might offer ‘guaranteed returns’ or invest in something exciting such as bamboo or hotels. But if something sounds too good to be true, it probably is. These schemes may or may not exist – if they do, they’re likely to be highly risky.

It’s also common for the fraudster to pretend to be from your bank. They might tell you there is a security problem with your account, so you must move your money to a new account straight away. “Don’t be afraid to terminate a call if you’re unsure, and make sure you don’t give out any personal information, such as your password or PIN,” says Martin Ansell, pensions expert at NFU Mutual.

“You can ask callers to put their request or offer in writing and show your adviser or provider. Also be wary of emails from unknown addresses that suggest you open an attachment or click on a link. Either option can load a piece of malicious code onto your computer or spread a virus.”

How to stay safe

When it comes to scammers, forewarned is forearmed. Fraudsters can appear financially knowledgeable, with credible websites, testimonials and promotional material that can be hard to distinguish from the real thing. Take five minutes to visit the FCA ScamSmart hub, which includes a ‘warning list’ of methods of approach and investment types, and advice on whether any particular scenario is likely to be a scam.

Remember, it’s unlikely a professional adviser will contact you out of the blue to offer financial advice. If you’re called about an investment opportunity, the safest thing to do is hang up. You could also check the caller’s credentials by visiting fca.org.uk/firms/financial-services-register and checking the FCA register.

Ansell says it’s vital to make sure you have up-to-date internet security including anti-virus software. “Most banks also encourage customers to download Trusteer Rapport. This software locks down communication between your computer and the bank’s website when you’re using online banking,” he explains. “Email is not a secure method to communicate with providers, so be very suspicious of any email requesting you follow a particular course of action. Many organisations use portals for communication instead – for example, HMRC uses the Government Gateway portal.”

Strength in numbers

Make sure you report all attempted frauds to Action Fraud on 0300 123 2040. It can investigate scams as well as spreading the word so other people don’t fall victim to the same trick. Warn your friends about scammers too – the more the word is spread, the harder it will be for fraudsters to succeed.

Six top security tips when you go online

David Brindley, NFU Mutual’s Head of Cyber Awareness provides six top cyber security tips to stay safe and lessen the risk from fraudulent scams

  • Clean up your online footprint - in cyberspace, every website you visit and everything you read or write is captured forever, leaving a trail that leads back to you. Google yourself. Once you’re aware of the type of information that makes up your footprint, you can begin hiding or deleting unwanted information. Ensure your privacy settings are set to ‘private’ on the social media sites you use.
  • Beware of all USB devices and discs – make sure you only accept these from trusted sources – it’s a common tactic fraudsters use to infect devices with malware. Always use encrypted USB sticks to protect your personal information.
  • Use encrypted apps – for example using ‘WhatsApp’ is more secure than sending text messages.
  • Keep systems and software updated – if you don’t, you could be vulnerable to cyber-attacks.
  • Install security software on all devices – don’t forget, your mobile phones and tablets need protection too. They are easy targets for cyber criminals.
  • Use strong passwords and protect them – never use names, car registrations, dates, phone numbers or words that can be found in the dictionary. Avoid writing your password down and don’t use the same password for multiple accounts. You can check your password strength using password.kaspersky.com. You can also check if your password has been compromised by using this tool: haveibeenpwned.com