A ban on nuisance calls, texts and emails about pensions has now come into force but people are still being urged to be on their guard.
Cold-calling has been used by fraudsters trying to steal life savings or persuade people to invest in high-risk schemes.
Some 10.9 million unsolicited pension calls and messages are made a year.
Any firm found flouting the rules faces a fine of up to £500,000, but experts suggest fraudsters may ignore the ban.
John Glen, economic secretary to the Treasury, said: “Pension scammers are the lowest of the low. They rob savers of their hard-earned retirement and devastate lives. We know that cold-calling is the pension scammers’ main tactic, which is why we’ve made them illegal.”
The government has faced criticism over the time taken to introduce the ban, which was first announced nearly two years ago.
How do the fraudsters operate?
Pension scams start with an unexpected call, text, social media approach or email – offering a free pension review, or a way to make attractive returns on pension savings.
But the money may be simply stolen or transferred into a high-risk scheme completely inappropriate for retirement savings.
Many offer eye-catching returns or high-rolling investments in hotels or green energy schemes that never materialise, or instead lead to losses.
Research by the City regulator, the Financial Conduct Authority (FCA), found that pension scam victims lose an average of £91,000 each.
Scammer ‘told the perfect story’
In August, Jennifer Ringstead told the BBC about how she and her husband, from the Vale of Glamorgan, invested – and lost – their pension pots. Together, the losses totalled more than £50,000. They were tricked when their finances were already overstretched.
She said that the story the fraudster told was convincing and came when they were at their most financially vulnerable.
“He was just perfect. I did not think for a second that anything was amiss. I asked questions, he had the answers to everything,” she said.
It is thought that only a minority of pension scams are ever reported.
How do the new rules work?
Certain types of cold calls, including those involving mortgages, are already banned.
Now, the new ban prohibits cold-calling in relation to pensions, except where the caller is authorised by the FCA, or is the trustee or manager of an occupational or personal pension scheme, and the recipient of the call consents to calls, or has an existing relationship with the caller.
Lesley Titcomb, chief executive of the Pensions Regulator, said: “The cold calling ban sends a very clear message – if anyone calls you about your pension, it’s an attempt to steal your savings.
“The ban draws a line in the sand for scammers. Cross it and you should expect to be prosecuted.”
Will it be effective?
Tom Selby, of pensions firm AJ Bell, said: “Prohibiting cold-calling is only part of the solution and will by no means eradicate the threat of scam activity altogether. Pensions remain a juicy target for fraudsters and some will inevitably look to circumvent the ban or simply ignore it altogether.”
He urged anyone who received a call out of the blue about pensions to simply hang up the phone.
Kay Ingram, director of public policy at financial adviser LEBC, was one of a number of commentators who said the cold calling ban of itself would not deter determined criminals.
“Success will depend upon the public having confidence that no legitimate adviser or pension provider would approach them in this way. The government, pension providers and the regulatory bodies will need to do more to stamp out this crime,” she said.