Helping employees avoid scams

A man on his phone to illustrate story about pension scams

Financial planning in association with Scottish Widows bannerThe consequences of an employee being scammed out of their retirement fund is not just an issue for the individual. Employers should know the risks and provide assistance – but there’s plenty of advice out there, writes Lynn Graves

  • Why it’s important for employers to help their workforce know how to spot a scam
  • The potential consequences of an employee being scammed out of their retirement fund, and where can they get more information
  • What can an employer do to help an employee who’s been scammed
  • Plus: five tips on scamming guidance

The pension revolution is already making a difference to millions of savers and thousands of over 55s now have access to their pots.

But as workers get to grips with the changes, they’re vulnerable to scammers, so how should employers deal with it?

It may not seem like an employer’s place to do anything, but if an employee is conned out of their retirement savings it could have implications for the business – not least if they’re no longer able to retire when planned.

Unchecked, a scam could spread through the workforce, and those who’ve been conned are at risk of further fraud attempts according to the Citizens Advice Bureau.

Surprisingly this is not always the people you expect to fall victim to fraud either. According to the Financial Conduct Authority (FCA), it’s often confident savers who’ve either invested in the stock market before, or believe they know what a good deal looks like, who are taken in by scammers. This suggests middle-managers who prefer a DIY approach over advice may be at greater risk.

Hallmarks of a scam

The most common hallmarks of scams are cold callers and spam text messages that claim to offer free advice, pension reviews or upfront cash.

Some may promise pension loans, or investments that are too good to be true. Transferring money overseas, consolidating rather than diversifying investments, releasing funds before the age of 55 and non-FCA registered companies should certainly raise alarm bells.

How to prevent employees being scammed

The Pensions Regulator’s (TPR) Scorpion booklet and the ScamSmart website offered by the FCA provide details on how to spot scams.

Employers should consider how best to share this information with those employees most at risk, such as those approaching 50, either on a targeted basis or through internal education programmes.

Scammers like to create distance between savers and official bodies to avoid detection, so where possible, encourage employees to speak to their provider, Pension Wise or an IFA, who are all well trained in spotting scams.

What to do if your employee is scammed

Start with establishing the facts, and encourage them to speak to their provider if they have not already done so.

They should report it to the police, or to Action Fraud. Other employees may also be at risk if they’ve talked about the scheme with friends, so find out who’ve they’ve spoken to and warn them.

It’s unlikely employees who are scammed will ever get their money back, and to add insult to injury, they may even be subject to a tax bill on top of what has been lost.

Talking to Pension Advisory Service will help them understand the tax implications. This may also be an emotional issue for some, so encourage use of an Employee Assistance Programme if you have one.

Top 5 tips

  • 1. Raise awareness among older workers
  • 2. Incorporate reminders into regular pension communications
  • 3. Distribute TPR’s scorpion booklet
  • 4. Encourage use of Pension Wise or IFAs
  • 5. Report suspected scams to Action Fraud

About author

Director magazine

Director magazine

Director is the magazine for business leaders. Free to IoD members and available to purchase through subscription, each edition is full of insightful interviews with entrepreneurs and company directors.

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