Pensioners and those approaching retirement should be aware of attempts by cold callers to dupe them into transferring their pensions into scam schemes.
The warning comes as four scammers have been ordered by the High Court to repay £13.7 million taken from 245 victims - the first time such an order has been obtained.
Between November 2012 and September 2014, these fraudsters cold called victims and used scam websites to persuade them to transfer their pension in exchange for promises that their money would be reinvested to meet target returns of 5% growth a year, plus upfront cash lump sums worth 10% of their pot.
The elaborate scam also used fake documents to dupe staff at the pension schemes holding the funds.
But once money was transferred out of the victims’ schemes, the scammers laundered most of the money into their personal bank accounts and, according to the The Pensions Regulator (TPR), “lived a life of luxury using the money – including showing off their spending on expensive goods, ski holidays and trips to Dubai and the Mediterranean on social media sites”.
The deception was only uncovered after a whistleblower contacted TPR in November 2014.
The case highlights the importance of being alert to sophisticated websites and cold calling techniques used by scammers who offer too good to be true incentives.
‘We will take tough action against pension scammers’
Nicola Parish, TPR’s executive director of frontline regulation, comments: “The defendants siphoned off millions of pounds from the schemes on what they falsely claimed were fees and commissions.
“While [Mr David] Austin was the mastermind, they all [all four scammers] took part in stripping the schemes almost bare. This left hardly anything behind from the savings their victims had set aside over decades of work to pay for their retirements.
“The High Court’s ruling means that Dalriada [the independent trustee appointed by TPR to take over the running of the schemes] can now go after the assets and investments of those involved to try to recover at least some of the money that these corrupt people took. This case sends a clear message that we will take tough action against pension scammers.”