The New Pension Scam and How To Avoid It

It’s a sad fact that those of us that have saved up to support ourselves in retirement by saving for a pension is often the target of scammers, both at home and abroad.
Of course, the authorities have been trying to fight the number of pension scams for some time, which only gets harder to do as the scams evolve.
One of the best ways to protect yourself against scam and mis-sold pensions is to learn a little bit about how to spot them.
So, here’s how a Third Generation pension Scam works, and how you can avoid it.

Old Vs New Pension Scams

As more people become aware of pension scams and how they operate, some scammers have upped their game.
Just a few years ago, people were receiving cold-calls and being told to transfer into SIPP pensions, investing in high-risk stuff like overseas property schemes and forestry projects, without being fully informed about the risks involved. This often resulted in people losing huge chunks of their pension, especially in circumstances where they were unable to make a claim.
But both the FCA and many pension savers got wise to this, forcing the scammers to change the rules of the game yet again.
So some began disguising the high-risk investments in bonds.
pension scam cheating

High Risk Investments In Disguise

Much of the scamming model has remained the same – it usually starts with a cold-call to the intended target, and it may involve a “free pension review”.
From then, SIPP pensions (as well as SSASs and QROPSs) are often still the destinations – more flexible pensions that can often hold high-risk investments.
But here’s the difference: instead of directly offering more obviously risky investment in something like overseas property, the investment is ‘wrapped’ in a bond, with a friendly sounding name that doesn’t hint at the high-risk nature of the investment lurking underneath – an extra layer of disguise.

Suitability

Let’s use an analogy to explain suitability and how negligent or even “scammer” financial advisers sometimes work.
Let’s say you want a chocolate bar, but you have a nut allergy.
Of course, you wouldn’t want a chocolate bar with peanuts in – it would be unsuitable for you. But the guy selling the chocolate bars is overstocked with peanut flavoured bars, or maybe makes a bigger profit if he sells those bars rather than plain chocolate.
So, he cleverly takes a chocolate bar with nuts in and wraps it up in a plain chocolate wrapper, so you make the purchase. What happens later? Well, it could cause you damage, and make you feel like you’ve been had, but by that time, our chocolate bar seller has disappeared off into the night…
Well, that’s sort of like disguising a high-risk investment so people who aren’t suitable would unwittingly push their money into it.

How to avoid a pension scam.

  • Information is power – get to know your pension arrangements, including where your money is invested and how it is supposed to pay a return. Be on the lookout for any investments that aren’t regulated by the FCA, or are based abroad – they may be higher risk than you thought.
  • Avoid cold-calls: we hope these will become less now that tougher data protection laws have come into effect, however scammers will still try to find a way to contact you. Free Pension Reviews can sound good, but they will often be far from unbiased as they look for places to put your pension that pay them the commission.
  • Find a reputable and regulated financial adviser – Always seek independent financial advice, and check your adviser out using the FCA register (free to use).
  • The Golden Rule: If it sounds too good to be true… you know the rest. Keep your head screwed on, and be on alert for high-pressure tactics like playing down your old pension, posing the new arrangement as a limited time only offer, and anything aggressive or biased.

Keep your retirement plans safe, and if you get into trouble, don’t take it lying down.
Tom Iveson is the Content Manager for Get Claims Advice where he covers topics related to SIPPs and mis-sold pensions

Learn to Be Financially Savvy When Buying a Car

When buying a car, even the most financially-prudent people seem to lose their head. It’s understandable though since you’re spoilt for choice with so many possibilities. But, failure to be financially savvy when buying a car can mean that you end up in a deep financial strain in the future. After all, what’s the point of owning a fancy car if you’re constantly stressed and worried about paying your bills?
Selling Your Car
Here’s a quick guide to help you make sound financial choices when you’re looking to buy a car.

Make A List of Your Needs

Notice how we mentioned “needs” and not “wants”. Many people tend to confuse the two. You need a fuel-efficient car, but you want a car with heated seats. One is a sensible need while the other is a non-essential want. Before you start looking at cars, make a list of your car needs. What are the things that you just can’t compromise on when it comes to your new car? Having a well thought out list will help you stay focused. When you know exactly what you need, you will be less likely to be swayed or distracted by attractive features that are basically-essential luxuries.

Narrow Down Your Car Brand Options

The market is flooded with so many different car brands. But only some of them offer maximum value for your money. Once you decide on your budget and what you need from a car, the next step should be to narrow down the car brand options. Do some research to find out which car brands offer you fuel-efficiency, resale value and just overall value for money.

Have A Clear Budget in Mind

Just because you can afford it, doesn’t mean you should buy it. When deciding on a budget for your car, don’t stretch yourself. Give a lot of leeway for unforeseen expenses that might crop up on other areas of your life.The last thing you need is to buy a car that’s well over your affordability range & struggle with monthly repayments and a ridiculously long loan period.

Check the Car’s History

So, you’ve found the perfect car. It’s in great used condition & you’re getting it at a steal. But before you sign that cheque, do a quick car history check. All you need is the VIN number. This is a very crucial step that should not be skipped. There are a lot of websites that offer this service. For a small fee, you can have the car’s accident history and any other hidden faults it might have.

Have A Mechanic Inspect the Car Before Purchase

It’s a good idea to have a seasoned mechanic inspect the car before you buy it. For one, having an auto expert look at the car will help bring any unknown issues to the forefront. It is possible that the seller is not aware of some issues that the car has since the issues have not been obvious. But a mechanic will be able to point them out, which can help bring down the price or even change your mind about buying the car. And if a seller refuses to let a mechanic inspect the car, then you have to ask yourself, what are they hiding? Do you want to risk buying the car without inspection, only to find out it has some major issue post-purchase? Or do you want to walk away from such a risk?

Sell Your Old Car Before Buying A New One

Don’t wait till you find your perfect car before selling your old one in a hurry. Last-minute car sale means that there’s a high chance that you will settle for a lower price, just to be rid of the old car. It also means that, in your rush to close the deal, you’re more likely to enter into a sale with unreliable or dodgy buyers, who might try to scam you.So, make sure you sell your old car to a trustworthy car buyer who will pay you top dollars for your car before you start shopping for a new one. Even if it means that you will be without a car for a few days, it’s still worth it than getting scammed with a lowball offer for your car.
All the above-mentioned tips will help you make sound financial decisions when buying a car. A car is a pretty expensive purchase, so it pays to be careful & takes all the necessary precautions to ensure that you’re getting the best value for every dollar spent.

Is it Better to Buy Car Insurance in the Summer?

There are a number of drivers that may not be aware of the impact the seasons have on insurance premiums. Common knowledge tells us that the winter months present more hazards and a higher risk of accidents than in the summer, but does this really affect car insurance premiums?
The answer is yes. It does not always come down to just the weather, however, but a number of factors which present a higher risk to insurance companies. Car insurance quotes change throughout the year for different reasons, yet, over the past few years in many parts of North America, December was the most expensive month to get cover. As prices have spiked in December since 2013, they have fallen by mid-January.
Buy Car Insurance
This is not a trend only experienced by Americans and Canadians. The British have also witnessed a trend in prices rising significantly in December.
According to The Telegraph, 2015 saw a rise in the price of an average policy by 7% in December. These prices were also highlighted during periods when “insurance prices otherwise remained fairly stable.”
One reason cited by a leading insurance provider in Britain was that, due to the holidays, there were fewer quotes being generated. The companies which were more active around Christmas and the New Yearcould effectively raise their prices due to the lack of competition. When everyone was back to normal in early January, marketing campaigns and price deductions naturally led to a drop in the average quote.

More Vehicles on the Road

Another theory behind why insurance prices tend to go up in December (but car prices don’t) is that there are more vehicles on the road. For example, the majority of workers will have time off over the holidays and will be driving from place to place; whether it is shopping for the holidays, visiting family, or simply enjoying leisure time.
More vehicles on the road mean more chances of crashes and accidents, in general. This could be the reason why certain states see a price hike in the summer months. As students are not in classes and there are more and more first time drivers looking for cover, insurance companies may deem this to be a significant risk in general.

Back to the Weather

It is very difficult to discount the role of the weather when it comes to insurance companies producing higher quotes during the winter months. With heavy rain, snow, icy roads and treacherous conditions, the chances of an accident occurring are naturally increased.
Insurance companies rely on a multitude of stats and figures, so they will account for things such as how the weather plays a part in collisions, for example. Understanding this may influence drivers in when they choose to look for insurance cover, if they have the luxury of doing so.
When it comes to purchasing car insurance, there may be certain times of the year when quotations are higher to some, but this is not applicable to all. The best thing to do, as always, is compare and go from there.