A list of top fraud watchwords for scheme members has been released by ACA Pension Life.

ACA Pension Life represents members of 13 schemes who have lost in excess of GBP 2billion and says an increasing number of people are becoming victims of pension scams.

It says the three phrases for pension schemes and their members to listen out for are first; "legal loophole", second, "sophisticated investor" and third, "free".

ACA Pension Life chairman Angela Brooks said: "If anyone tells you there is a 'legal loophole' that allows you to access part or all of your pension before the age of 55 and that there will be no tax to pay, they're lying and you should disengage immediately."

"Second, if anyone tells you you're a sophisticated investors" and should be investing your pension in assets that are 'not traditionally available' red flags should be hoisted."

"And third, if you are told you can transfer your pension free of charge, make sure you find out exactly what the long-terms charges entail because there is no such thing as 'free'."

ACA Pension Life says millions become the victims of pension scammers every year, and many of the scammers are skilful conmen.

Since the pension freedoms were introduced last April, it says, an increasing number of people have fallen victim to pension fraud.

"The majority of those who are duped lose their entire life savings and then face mountainous debts and tax demands from HMRC," said Angela Brooks, who stressed the importance of pension schemes and their members being able to recognise a scam.

"They are constantly changing their tactics and every day we hear of more people whose lives have been wrecked by these scams."

There are several initiatives currently in operation, including the Pension Regulator's Scorpion campaign, the Financial ConductAuthority's ScamSmart campaign, and the government's Project Bloom.

But ACA says they are not effective enough and is calling on the government to set up an independent, specialist task force to tackle it.

"The government must insist HMRC stops registering pension schemes without doing due diligence – a failure to do so will inevitably mean more lives will be ruined by pension liberation scammers," Brooks said.

"Not only that there is an associated cost to the government as those left without financial means will be reliant on the already overstretched welfare system for years to come."

First published 14.01.2016

Lindsay.sharman@wilmingtonplc.com