A pension provider has put more than 500 Qualifying Recognised Overseas Pension Scheme (QROPS) transfers on hold because they are suspected scams.
The transfers are among more than 1,650 blocked payments to dubious pension promoters, says Phoenix Group, one of the UK’s leading financial firms.
The firm says the risky schemes with transfers blocked break down as:
- 48% are to suspicious SSAS or SIPP schemes,
- 33% to suspicious QROPS
- 19% to suspicious defined contribution occupational schemes.
The dubious pension schemes mainly promote unregulated investments to retirement savers who are looking for higher returns on their cash than their fund offers.
Lure of higher investment returns
Regulator the Financial Conduct Authority (FCA) has ordered the investments should only be offered to sophisticated investors who understand the risk and can afford to lose the cash, but Phoenix alleges most of the investments are offered after promoters cold call pension savers with pots of £12,000 or less.
A quarter offer property investments mainly offshore, 10% promote ethical investments such as tree plantations and another 10% put forward alternative investment opportunities such as storage units, oil and gas wells and airport car park spaces.
The firm has stepped in to stop 1,200 customers potentially lose £26 million to the firms highlighted as possible fraudsters.
“Despite a campaign to highlight the problems with pension fraud, consumers are still taking risks with their savings as they hunt higher returns,” said a spokesman for the firm.
Men most at risk
“The suspected scammers have a well-worn strategy. They contact retirement savers offering a pension review with a cold-call, text or email and then try to persuade them to sign over their cash to one of their schemes by offering unrealistic returns.”
The firm asked customers if they checked out the credentials of financial advisers that approached them with cold-calls and only half called the FCA or Companies House to make sure they were dealing with properly authorised and regulated firms.
“Fraudsters are evolving to take advantage of consumers wanting to exercise their new pension freedoms,” said the spokesman. “Most at risk are those withdrawing cash to reinvest for what they believe is a better return.”
The firm also pointed out 77% of potential pension fraud victims are men, compared to 23% of women.