Panicking pension savers are likely to be targeted by scammers seeking to take advantage of the market turmoil caused by US President Donald Trump‘s tariffs.
Pensions consultancy Aon has issued a warning to all savers who are in a defined contribution scheme not to answer the phone or reply to emails or text messages from organisations claiming to offer a safe haven for their cash.
Many pension savers have seen thousands wiped off the value of their pension fund and there are fears that those age 55 or over, who can withdraw money from their pension whether or not they are retired, may fall prey to scams.
The Daily Express revealed earlier this week that pensions had taken a significant hit, with some savers seeing a £6,200 drop in value, as global events ripple through retirement funds.
Global markets were shaken at the beginning after US President Donald Trump’s new tariffs triggered a sharp downturn. The FTSE 100 fell more than 5% in early trading, while Asian shares also plunged following Friday’s dramatic sell-off on Wall Street.
According to the Pensions Regulator, DC pensions, which account for the vast majority of savers currently working in the private sector, hold around £200 billion on behalf of 30 million Brits.
Unlike final salary schemes and those run by local authority and for government employees, pension savers can withdraw their pension cash once they reach 55.Chris Inman, partner in DC investment at Aon, said volatility in the equity markets was likley to continue but that savers should try and stay calm.
He outlined three key rules to reassure savers:
- The ups and downs of markets, while uncomfortable, are a normal part of investing.
- Pension savers and those running pension schemes, should generally be focusing on the long-term. That is, they should not solely focus or make decisions based on short-term market movements.
- It is important for DC savers who are close to retirement and planning on accessing some or all their pension fund, to consider the potential short-term impact of recent market volatility on their plans. Before taking action, it’s likely to be beneficial for them to speak to a financial adviser for guidance that is specific to their situation.
“It’s also important to highlight that, over time, we expect markets to recover from the recent volatility. It is also well worth remembering that as markets recover, pension savers who are making regular contributions will be invested at more attractive prices. This might seem counter-intuitive but can lead to greater long-term returns.”
Inman urged savers to staying alert to scams. He said: “DC scheme members should also stay on their guard against pension scams. Scammers may be looking to prey on concerns about falling pension values by trying to persuade people to transfer retirement savings out of one scheme and into another – and with a promise of higher returns or early access to their savings.
“Pension schemes and employers should encourage their savers to be cautious with the funds they have built up for their retirement. They should also signpost them to the Pension Regulator or FCA guidance on avoiding scams.
“Whatever the circumstances, the key message to savers is not to rush into decisions affecting their long-term savings, based on short-term market volatility. And, if in doubt, seek professional advice.”
Government website MoneyHelper has the following advice for pension savers:
Scammers will try to lure you with promises of upfront cash and one-off ‘deals’ with ‘guaranteed’ high returns.
Remember that pension scams can take many forms, and usually appear to be a legitimate investment opportunity. But pension scammers are clever and know all the tricks to get you to hand over your savings.
They might try to persuade you to cash in your pension – either the whole lot or a large sum – and hand the money to them to invest.
Watch out particularly:
- for people contacting you out of the blue, or
- adverts claiming to offer free pension reviews or no-obligation consultations.
If you want help with your immediate needs and help to see if you may be able to get your money back, call our financial crimes and scams unit on 0800 015 4402.
