People over 50 vulnerable to pension scams

One in four men would spend his pension on a dream holiday. Less than a quarter would seek professional advice about their private pension

Nottingham, UK, 17 February 2016 – Less than two fifths of people over 50 are wary about potential scams targeting newly freed pension money. 

As pre-retirement over 50s start to think about how they will take advantage of the new pension freedoms, they may be leaving themselves vulnerable to pension scams due to their apathetic attitude towards a potential attack. 

This is in spite of the fact that fraud levels are increasing and scammers’ methods are becoming more sophisticated. Recent figures from the City of London Police show that between April-August 2015 £9.1m worth of pension scams were reported in the city compared to £4.5m for the whole of 20141.

Nick Mothershaw at Experian comments: “The new rules present opportunities for fraudsters to access very large sums of money. In some cases, fraudsters are stealing the identities of pensioners in a bid to access their pension pots, and our previous research has shown that pensioners have been a particular focus for identity fraudsters.” 

Over two fifths (42%) of pre-retirement over 50s would choose to reinvest their cash lump sums in more profitable projects. However, less than a quarter (23%) would consult a financial advisor.  The majority would also choose to take control of the decision themselves with over half (51%) stating that they would do their own research when deciding where to invest.

Experian’s research also found that one in five (20%) would treat themselves to a dream holiday or a new car.  Spending the pension on a dream holiday was significantly more likely among men, with 24% saying it would be their first choice.  This was compared to 14% of women.  Overall, it was the third most popular option for those who would take their pension in a cash lump sum.

However, with scammers targeting pensioners, cybercrime on the increase and many of these individuals showing a lack of concern about the issue, they could be leaving themselves open to fraud.

Opinions are split as to who should take responsibility should pension fraud occur. Almost a third (29%) believe it is the individual’s own responsibility if they are defrauded of their pension pot. However, a fifth (20%) believe pension providers should be held responsible, one in six (17%) believe the Government should step in and the same number (17%) believe the pensions regulator should be accountable.

Nick Mothershaw comments: “Cybercrime is becoming more sophisticated and everyone needs to play a role in fighting fraud.  Fraudsters are accessing to people’s personal information through cyber-attacks and illegally trading personal profiles online. Services like Experian’s web monitoring tool can help alert people to potential ID theft by monitoring the wider web and sending instant alerts if information they provide appears somewhere new online.

“Organisations can also take steps to ensure that the people trying to access their pensions are the genuine recipients, such as checks to confirm a bank account belongs to a genuine policyholder or that an ID document is genuine.

“In cases, however, where fraudsters are offering to invest the cash into scams that can seem very convincing. Those who choose to invest should consider advice from an independent financial advisor, so that only reputable schemes or financial providers end up with their money.”

Top five options for pensions taken as cash lump sums

Total

Male

Female

  1. Re-invest it in more profitable projects

42%

43%

40%

  1. Pay-off long-standing debt or mortgage

24%

25%

24%

  1. Treat yourself i.e. book a dream holiday or buy a new car

20%

24%

14%

  1. Give the money to family members

7%

6%

9%

  1. Give the money to charity

2%

2%

1%

Other Experian research found that around three in four people aged over 55 are, however, concerned about cyber criminals accessing personal information about them from banks and online financial services companies (72% of over 55-64 year olds and 70% of over-65s).[1] There are five key steps people should consider to help them protect their information online:

  1. Online Passwords: While it may seem overwhelming, it is crucial to have secure, unique passwords for as many online accounts as possible. Avoid using words from the dictionary; consider using the first letter of each word in a sentence instead, and a mixture of lower and upper case letters and numbers.
  2. Double-lock: Always use a home screen lock on your mobile devices. Be smart with your smartphone and be aware of the vast amounts of information that can be stored – including emails and apps that can be accessed without a password from your home screen.
  3. On the move: Be conscious of the information you share when using shared WiFi networks, which can be compromised more easily by fraudsters than secure networks.
  4. Security first: Before sharing personal information online, particularly card and other financial details, check that the website is secure. The web address should be preceded by “https:” and a padlock symbol.
  5. Credit Wise: Fraudsters operate to make money and one of the first places people notice that their information has fallen in to the wrong hands is by spotting if credit has been applied for under false pretences. Monitor your credit report and bank statements regularly as it will help you spot any suspicious activity as early as possible to avoid financial loss.

People who think they may have become a victim of identity theft should notify the police and contact their bank. Experian's Victims of Fraud service is also available free to Experian customers and has a dedicated team of fraud resolution experts to help investigate and resolve suspected fraud as quickly as possible. 

 

-ENDS-

 

Notes to editors

Interviews with Nick Mothershaw are available on request. 

Nick Mothershaw is the UK&I Director of Identity and Fraud at Experian.

This press release is based on a survey conducted by Opinium Research between 23 and 25 September 2015 amongst 513 adults over 50 to a nationally representative sample

http://www.which.co.uk/news/2015/10/pension-scams-surge-following-new-freedoms-419058/

[1] ComRes interviewed 2,008 GB adults online between 15th and 17th January 2016. Data are weighted to be representative of all GB adults aged 18+.

Contact:

Sarah Muir / Edward Keough

Lansons

020 7490 8828
sarahm@lansons.com / edwardk@lansons.com

Serj Hallam

Experian

0115 9922773

Serjeet.hallam@experian.com

About Experian

We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft. In 2015, we were named by Forbes magazine as one of the ‘World’s Most Innovative Companies’.

We employ approximately 17,000 people in 37 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil. Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2015, was US$4.8 billion.

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