Millions of people are at risk of having their pension savings scammed, according to new research from LV=.

Consumers are becoming increasingly unable to recognize fraud as criminals become more sophisticated.

Read on to find out how people are at risk of being scammed and get advice on how to spot the warning signs of pension fraud.

7.3 million people have encountered pension scammers

Changes to pension rules over the past decade have created more opportunities for fraudsters looking to steal your pension savings.

Criminals are trying to take advantage of the increased flexibility. According to LV=, around one in seven – or 7.3 million – adults in the UK have been the victim of attempted pension fraud in the past 12 months.

These people were encouraged through unsolicited phone calls, text messages and emails to transfer or release money from their pension.

The research was conducted as part of the LV= Wealth and Wellbeing Research Programme, a quarterly survey based on responses from 4,000 people.

How much do people lose?

Separate data from the Pensions Management Institute (PMI) shows that pension and investment fraud cost victims more than £2.6 billion between 2020 and 2023.

Data from the City of London Police’s National Fraud Intelligence Bureau shows that almost 100,000 victims of pension and investment fraud will fall victim to fraud between 2020 and 2023. On average, victims will lose £26,773 to fraudsters.

Part of the problem is the proliferation of small pots. About six million adults have multiple pension pots, which increases the complexity of managing retirement savings.

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Fraud is becoming increasingly difficult to recognize

The LV= research also shows that more and more people are becoming victims of general financial fraud.

In total, 6.9 million people have fallen victim to fraud in the past 12 months, of which 3.8 million people lost money due to purchase scams.

It is becoming increasingly difficult to spot fraud. More than half of adults now say pension fraud is harder to spot, and almost four in five (77%) say fraudsters have become more sophisticated, with increasingly credible websites and other tools.

Fraudsters have a variety of ways to snare you. Figures show that 42% of UK adults have experienced a phishing scam in the last 12 months, just over a third (36%) have experienced a trusted organisation scam and around a quarter (24%) have experienced a refund scam.

• More information: how to recognize pension fraud

Pension fraud: recognize the signs

Understanding the different types of pension and investment fraud and the tactics fraudsters use can help you protect yourself from becoming a victim:

• Cold calling for pensions is illegal. Any unsolicited phone call could be a scammer. The same goes for emails, texts, or visits. A legitimate company will not just call you.
• Being forced to make a quick decision is a red flag. Paperwork being couriered to your door for a signature ‘to speed things up’ should set off alarm bells.
• Look after promises of low risk/high return. Fraudsters may promise you a high return on your money, often including investments abroad. If it sounds too good to be true, it probably is.
• Be wary of offers from a ‘free pension overview’. Companies that offer free reviews are not authorized. The investments pushed as part of a review are at best dubious or outright scams.
• Avoid companies that offer ‘help’ to release money from your pension. You can only withdraw money from your pension if you are 55 or over, except in certain circumstances, such as ill health. You could face a 55% tax bill if you withdraw money before you are 55, even if you didn’t realise you were breaking the tax rules.
• Contact details are important. If you have little or no contact information, addresses or telephone numbers for the company you are doing business with, it could be a scam.

How to report pension fraud

When people are targeted, relatively few know what to do. Only 32% of adults in the UK know how to report a suspected scam. For those who are clients of financial advisers, however, this figure rises to 55%.

If you are a victim of fraud or suspect fraud, you must report this to Action FraudThey can best help you with your next steps and can provide you with advice specific to your situation and the type of fraud you have been a victim of.

It may take some time to get your money back if you lose money to pension fraud, but you are usually protected to some extent.

You will be in a much better position if you have dealt with a Financial Conduct Authority (FCA) regulated adviser or pension provider.

If a regulated company was involved, you can Financial Ombudsman Service to investigate and decide whether you are eligible for compensation.

If the company you used has since gone bankrupt, you can contact the Financial Services Compensation Scheme (FSCS).