What is a pension scam
Anyone can be the victim of a pension scam, no matter how financially savvy they are. It’s important that everyone can spot the warning signs.
Scammers try to persuade pension savers to transfer their entire pension savings, or to release funds from it, by making attractive-sounding promises they have no intention of keeping.
The money is often invested in unusual, high risk investments or can be simply stolen outright.
Some scammers also promise early access to pensions (typically before 55) through ‘loans’ or ‘loopholes’ which could result in you losing all of your money and facing a high tax bill from HMRC. Pensions can only be accessed before 55 in exceptional circumstances.
The Pension Regulators booklet on how to spot a scam and The Pension Advisory Service booklet ‘Scamproof your savings’ give lots of useful information.
How to spot a potential scam
Scammers can use many different methods to tempt people into parting with their pension savings. They usually contact people out of the blue via phone, email or text, or even advertise online. Or they can be introduced by someone you know who is unknowingly being scammed.
Scammers often make false claims to gain your trust, for example claiming to be authorised by the FCA or that they don’t need to be authorised by the FCA because they aren’t providing the advice themselves. Some even claim to be acting on behalf of the FCA or the government service Pension Wise.
Scammers often make false claims or tempt you with special offers such as:
- Free pension reviews
- Higher returns - guarantees they can get you better returns on your pension savings
- Help to release cash from your pension, even though you’re under 55 (an offer to release funds before age 55 is highly likely to be a scam)
- High pressure sales tactics - the scammers may try to pressure you with ‘time limited offers’ or even send a courier to your door to wait while you sign documents
- Unusual investments - which tend to be unregulated and high risk, and may be difficult to sell if you need access to your money
- Complicated structures where it isn’t clear where your money will end up
- Arrangements where there are several parties involved (some of which may be based overseas) all taking a fee, which means the total amount deducted from your pension is significant
- Long-term pension investments – which means it could be several years before you realise something is wrong
- Remote access – scammers may pretend to help you and ask you to download software or an app so they can access to your device. This could enable them to access your bank account or make payments using your card
How to protect yourself against scams
- Reject unexpected offers
- If you are contacted out of the blue about a pension opportunity, chances are its high risk or a scam. If you get a cold call about your pension the safest thing to do is hang up
- Be wary of free pension reviews – professional advice on pensions is not free
- Beware of being talked into something by someone you know. They could be getting scammed too
- Check who you are dealing with
- Check the FCA Register - Make sure that anyone offering you advice or other financial services is FCA authorised
- If the firm is on the register, call the FCA consumer helpline on 0800 111 6768 to check the firm is permitted to give pension advice
- Check they are not a clone - A common scam is to pretend to be a genuine FCA authorised firm (called a ‘clone firm’). Always use the contact details on the Register, not the details the firm gives you
- Don’t be rushed or pressured
- Take your time to make all the checks you need – even if this means turning down an ‘amazing deal’. Be wary of promised returns that sound too good to be true and don’t be rushed or pressured into making a decision
- Get impartial information or advice
- You should seriously consider seeking financial guidance or advice before changing your pension arrangements:
- The Pensions Advisory Service - provide free independent and impartial information and guidance
- Consider using a Financial Advisor - it’s important you make the best decision for your own personal circumstances so you should seriously consider using the services of a financial adviser
- Pension Wise - if you’re over 50 and have a defined contribution pension, Pension Wise offers pre-booked appointments to talk through your retirement options
If you are unsure and need some help, please give us a call on 0800 652 7000 (+44 1325 271 860 from abroad).
What to do if you suspect a scam
If you've agreed to transfer your pension or make an investment and now suspect a scam, call us straight away on 0800 652 7000 (+44 1325 271 860 from abroad).
Report to the FCA - you can report an unauthorised firm or scam to the FCA by contacting their Consumer Helpline on 0800 111 6768 or using their reporting form.
Report to Action Fraud - if you suspect a scam you should report it to Action Fraud on 0300 123 2040 or at www.actionfraud.police.uk.
Unauthorised firms and individuals | FCA
Avoid pension scams | The Pensions Regulator