Scam Watch: Beware 'free' pension reviews
Consumers are being warned to be wary of agreeing to a 'free pension review' that could seriously jeopardise their retirement savings.
The Financial Conduct Authority (FCA) has urged pension savers to be mindful that unregulated companies are cold-calling consumers to offer high-risk investment advice.
They are also sending emails, text messages and using online advertising.
The aim of the 'review' is to encourage you to move money from an existing personal or occupational pension to a self-invested personal pension (SIPP) or a small self-administered scheme (SSAS).
The money is then typically invested in investments not regulated by the FCA, such as overseas property developments, forestry or storage units known as store pods.
Such investments can be enormously risky and can be difficult to sell and consumers could lose all the money they move, reducing what they have to live on in retirement.
And they also have less protection should anything go wrong and may not be able to complain to the Financial Ombudsman Service.
The majority of companies offering the reviews are not authorised by the FCA, although some falsely claim they are acting on its behalf.
Others claim to be working with the government following the Budget commitment in March to introduce a free advice service for people at retirement.
However, no such service has been launched yet, so these claims are highly unlikely to be true.
Have you been scammed? Let the Moneywise Scam Watch team know by emailing firstname.lastname@example.org
Tracey McDermott, director of enforcement and financial crime at the FCA, said: "People should be very wary if they are contacted out of the blue by someone offering a 'free pension review'. Most of the companies offering this 'service' are not authorised by us, and we're concerned that the reviews often end with pension pots placed in higher-risk, unregulated investments.
"If you see or receive offers of 'free pension reviews', just ignore them. If you are called out of the blue to discuss your pension, just hang up. Your pension is far too important to be put in the hands of a cold-caller."
Remember that authorised financial advisers offering impartial advice are very unlikely to cold call customers – especially to offer their services for free.
You can check to see if a company is regulated at fca.org.uk/firms/systems-reporting/register.
Like a self-select ISA but for pensions, self-invested personal pension is a registered pension plan that gives you a flexible and tax-efficient method of preparing for your retirement. It gives you all sorts of options on how you put money in, how you invest it and how it’s paid out and offers a greater number of investment opportunities than if the fund was managed by a pension company. SIPPs are very flexible and allow investments such as quoted and unquoted shares, investment funds, cash deposits, commercial property and intangible property (i.e. copyrights, royalties, patents or carbon offsets). Not permitted are loans to members or people or companies connected to the SIPP holder, tangible moveable property (with the exception of tradable gold) and residential property.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.