Liberation fraud 'triples' following pension freedoms
The amount of pension liberation fraud more than tripled in the month following the new pension freedoms, figures suggest.
Action Fraud - part of the City of London Police - said members of the public reported losses of £4.7m in May.
That compares to losses of £1.4m in April, and £932,000 in March.
However Action Fraud said it was too early to conclude that the increase was a direct result of the introduction of new pension freedoms in April.
That is because victims may report the losses many months after they were actually defrauded.
"With regards to the recent pension reforms, and the effect that this will have on pension liberation fraud, it is at this stage difficult to draw any conclusions," said a spokesperson for Action Fraud.
The pensions minister, Baroness Ros Altmann, agreed with that analysis.
She said she was "not convinced" that the pensions freedoms have led to a rise in fraud.
"People are a lot more aware of it, and are starting to report it. It can take a long time for people to realise they've lost their money," she told BBC Radio Five Live.
Pension liberation fraudsters typically contact those with pension pots, and persuade them they can release the money - for a fee.
However they usually do not make it clear that by doing so, the victims can be subject to large tax bills.
Anyone under the age of 55 is liable for tax on their liberated pension at a rate of up to 55%. Following the pension reforms, which came in at the beginning of April, those over 55 are liable for income tax on 75% of their savings.
Anyone whose income exceeds £150,000 in one year- including the amount taken out of their pension pot - could have to pay up to 45% in tax.
The losses reflect the amount the victims owe in tax, plus the fee they have paid to the fraudsters.
The figures show that, on average, victims lost £60,500 - in some cases more than half their pension.
How to avoid being scammed
- Never give financial information to a cold caller
- Find out whether the company approaching you is registered with the Financial Conduct Authority
- Seek independent advice before agreeing to a pension transfer
- Never do anything in a hurry
- Follow further advice from the Pensions Regulator here
However, even though the amount of fraud has increased, the number of cases being reported has actually fallen.
There were 78 cases of reported fraud in both May and April, down from 82 in March, and 240 in February.
Project Bloom has been set up by the government to try and combat such pension fraud.
Further tips on how to avoid being scammed are available on the Serious Fraud Office website, as well as elsewhere.