Context

In 2021, reports of pension scams increased 45%, and fraudsters stole over £2m from people in the UK in just 6 months. However, this is likely to be a significant underestimate of financial losses, as potentially fewer than one in five scams are reported. There is not currently a detailed understanding of the scale and nature of pension scams or rigorous evidence on what governments and the industry can do to reduce pension savers’ susceptibility to fraud.

The study

The Money and Pensions Service (MaPS) commissioned the Behavioural Insights Team (BIT) to conduct an evidence review of the academic and grey literature on this topic as well as qualitative interviews with people affected by scams and professionals working for pension providers and government bodies.

• a keyword search with a preference for recent publications and, in the case of evaluations, Randomised Controlled Trials (RCT) and high-quality qualitative evaluations, with additional sources found by snowballing or recommendation. The review was complemented by discussions with a US pensions expert.
• ten interviews with professionals working for pension providers and government agencies, an interview with an investigative journalist who has extensive knowledge of scams, and six interviews with people affected by pension scams.

This project was part of the Financial Capability Lab, a programme funded and overseen by the Money and Pensions Service and implemented by the Behavioural Insights Team.

Key findings

Findings include the following:

• Significant methodological challenges remain in the estimation of the scale of the problem in the UK
• The types of scams and the tactics are often very similar to investment scams more generally
• The financial and emotional cost of pension scams is high. The impact of scams goes beyond the financial loss, potentially leading to a loss of confidence and trust, detrimental health outcomes and breakdown of relationships with family and friends.
• Scams can happen to anyone. Once an individual has been targeted, there is a significant risk of re-targeting.
• MaPS as well as other organisations in the UK working to prevent pension scams and supporting those affected – such as pension providers – have at their disposal a range of touchpoints which lend themselves to interventions informed by the evidence presented in this review. Combined with already existing approaches, they can provide strong protection against scams.

Points to consider

• The report addresses the limitations of the study, namely evidence gaps, lack of quantitative data and the wide range of tactics used by scammers making it impossible to say whether the findings are universally applicable. The key evidence gaps identified are in economic crime, risk factors and what works to mitigate against such scams. The report also acknowledges the shame associated with being scammed which results in under reporting of this type of crime.
• Of interest to pension providers, government, policy makers, regulators and support agencies.
• Highly relevant given the growth of this type of scam and evidence in the report that this increase is global.
• Specific to the UK but conversations with the US expert in the study suggest that research will resonate in other markets.