Retirees risk straying into "dangerous territory" occupied by so called pension predators who are looking to exploit them, Scottish Friendly has warned.
The company said there were "a new breed of salespeople that plan to exploit the recent pension freedoms by targeting retirees and encouraging them to place their money in unregulated investments".

Scottish Friendly believes the pension reforms will prompt a raft of mis-selling leading on to poor investment decisions that could leave thousands of people financially desolate.

Neil Lovatt, director at Scottish Friendly, said: "The pension reforms have opened up a great number of opportunities for pensioners, but also opportunities for unscrupulous people to exploit their newly acquired wealth.

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"Our concern is that freedom isn't always what it's cracked up to be; sometimes it could lead to people straying into dangerous territory. There are a number of ways, for instance, in which people might be encouraged to invest in schemes which fall outside of the protection of the Financial Conduct Authority.

"This might include the likes of purchasing a buy-to-let property, buying a classic car or investing in a start-up business.

"Because there are no regulations prescribing the way in which these investments are sold, it leaves people at risk of buying into an overzealous salesperson promising the world in order to secure the sale.

"We've seen this happen before, for instance pension transfer mis-selling was a shameful blight on the industry and required the introduction of a number of new consumer protections.

"These protections meant that the FCA ensured people were treated fairly and the protection of the Financial Ombudsman offered a form of redress if an investment was mis-sold. However now it's very possible that people might unsuspectedly stray outside of the comfort and protection of the regulator and become a victim of these new sales predators."

Scottish Friendly said it has concerns that if people fall victim to pension predators, there will be no Government support to help them, leaving them potentially financially desolate.

Mr Lovatt said: "The Government has applied the 'Deprivation of Capital' rule to pensions. This means that if you use your retirement fund in a way in which it is deemed to be reckless, lose all of your money and end up needing to rely on the state for support, you will only be allowed to do so if the Department of Work and Pensions agrees with your financial decisions.

"In effect, the Government is reserving the right to decide after the event whether or not an individual used that money wisely. It is unclear how the DWP will identify what will and will not be accepted as depriving yourself of capital and it gives no guidance as to how people will be allowed to spend their pensions."