Retirees are at a greater risk of being mis-sold investments thanks to the government’s pension freedom reforms, experts say.
Concerns were first raised in 2015, with MPs warning that giving those aged 55 and over full access to their pension savings could leave them more susceptible to scammers.
Their predictions have come true, with thousands of pensioners falling victim to pension mis-selling and outright scams.
Thousands of people have been mis-sold inappropriate pension products and investments, without having the risks properly explained to them.
Often, independent financial advisors will recommend a certain product or investment in a bid to obtain commission, even if their recommendation isn’t the most suitable option for the customer.
We regularly hear from people who’ve fallen victim to outright investment scams. Initially, these people are often targeted by cold callers offering them low risk and high return investment opportunities in everything from overseas property to storage pods.
Although such investments are often positioned as a sure-fire way to grow existing savings, in reality they can result in little to no growth and in some cases, have caused pensioners to lose thousands of pounds from their life savings.
The National Employment Savings Trust (NEST) has said that more needs to be done to protect retirees from losing money to pension mis-selling and investment scams.
NEST chief customer officer Gaven Perera-Betts said: “We believe there’s a risk that, without action now, we’re setting up a generation of savers for failure.
“Qualifying workplace pension schemes, which have a fiduciary duty to their members, should be expected to offer a straight-through solution from saving through to taking an income, so anyone who doesn’t want to shop around doesn’t end up worse off.
“We want strong default options in place to complement a thriving and competitive advice market. We believe that’s the way to avoid the next pensions mis-selling scanfal and give millions of savers peace of mind in old age.”