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Pension scams

Pension schemes continue to be an attractive target for fraudsters. Anyone can be the victim of a pension scam – no matter how financially savvy they think they are – and scammers are stealing an average of £91,000 per scam.

With scammers developing increasingly sophisticated tactics and increasingly convincing literature, it’s important to get to grips with all forms of potential fraud, so you know what to look out for. Scam calls from Amazon or HMRC may be easy to spot, but don’t be tricked when potential scammers mention pensions. These kind of scam offers can include:

  • Free pension reviews. A recent YouGov poll* found that 1 in 8 people said they would trust an offer of a ‘free pension review’ from someone claiming to be a pensions adviser.
  • Higher returns. Guarantees they can get you higher returns on your pension savings.
  • Help accessing your pension savings before age 55. You will probably be hit with a hefty tax bill of up to 55% of the value of your savings if you access them before age 55.
  • High-pressure sales tactics. 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. These tend to be unregulated, high risk and may be difficult to sell if you need access to your money. Even wine, for example, is an unregulated investment.
  • Complicated structures where it isn’t clear where your money will end up.
  • Long-term pension investments. This means it could be several years before you realise something is wrong.

Essentially, scammers are looking to present you with an attractive opportunity that persuades you to transfer all – or part – of your pension savings to them. Scams can come in many different forms and the examples included above are just some of the latest attempts by fraudsters to make financial gains.

If in doubt, apply the SCAM test:

S: Seems too good to be true

C: Contacted out of the blue

A: Asked for personal details

M: Money is requested

If you’re not sure, as a first step you can check whether the pension opportunity you’ve been offered appears on the FCA Warning List to see if it’s a known scam.

» Check your pension opportunity


Coronavirus and pension scams

The risks of pension scams has increased as a result of the COVID-19 pandemic. If you’re facing financial difficulties because of the coronavirus, you may be tempted to take more risks with your finances, or cash in some of your pension early.

Remember that it isn’t possible to access your pension savings through the Scheme before the age of 55, except in cases of ill-health. If you're worried you've been scammed, contact us straightaway. We may be able to stop a transfer that hasn’t taken place yet. You can also report the scam to the police at Action Fraud and to the FCA online.


Key tips to help you stay safe

Read these “do’s” and “don’ts” to help protect yourself against potential scams:


DON'T

  • Don’t take a pension offer from a cold call or a text

    Be suspicious when people call or message you out of the blue, asking you to make a decision about your pension: they are likely to be scammers.

    In January 2019, the government introduced a cold calling ban regarding pensions. As a result of the government’s decision, you should not be contacted by anyone about your pension, either by phone or text, unless you have previously given them permission.
  • Don’t be rushed or pressured into making decisions

    Scammers will usually try to pressure you into making a rushed decision with offers that are too good to be true. They may also say that the opportunity is only available for a short period of time – and even send a courier to your door to wait while you sign documents!

    Take your time to do all the checks you need – even if this means turning down an ‘amazing deal’.
  • Don’t be misled by unrealistic returns or trust so-called "savings experts"

    Scammers will take advantage of your desire to maximise your pension savings by presenting themselves as ”savings experts”. These experts will say that they know of tax loopholes and/or offer high rates of return on your investment, while also claiming that it is a low-risk one-off investment. Don’t be fooled!

    At the same time, don’t be talked into accepting a pension offer by someone you know. They could be getting scammed, so make sure you check everything yourself, even if a friend or family member has recommended it to you.
  • Don’t be misled by social proof
    Scammers will regularly share fake reviews and testimonials with you around their pension opportunity – and claim that many others have invested in this way with great success. They may also have convincing literature, including professional-looking websites, and appear to be very financially knowledgeable, downplaying the risks to your money. Don’t fall into their trap!

DO

  • Do get impartial information or advice

    You should always seek financial advice or guidance before making any significant changes to your pension arrangements. MoneyHelper has some helpful guidance around finding a financial adviser.

    Remember, you don’t need to wait until you are at high risk of a scam to ask for information about a pension provider or advice about whether you should transfer your pension.

  • Do check the FCA Warning List
    Check your pension opportunity against the FCA Warning List to see if it’s a known scam. You can also search to see if a firm is operating without authorisation.
  • Do double check a company’s legitimacy

    A recent YouGov poll* found that nearly a third of people said they wouldn’t know how to check whether they were speaking with a legitimate pensions adviser/provider.

    If you are contacted by a suspicious company or one that you have never heard of, check the Financial Services Register to verify that they are a registered company. Almost all financial services firms must be authorised by the Financial Conduct Authority (FCA) – if they’re not, it’s probably a scam.

    Be particularly suspicious of companies with only a mobile number and a PO Box address as contact details, and always double check with the FCA. When checking a company against the Financial Services Register, check if their reference number (FRN) and contact details match those in the register.

    If you’re dealing with an overseas firm, you should also check with the regulator in that country – and review scam warnings from other countries..

    A common scam is to pretend to be a genuine firm (called a ‘clone firm’). To protect yourself against this type of scam, make sure you use the details on the Financial Services Register, rather than the details provided to you.

  • Do hang up the phone and report suspicious activity

    If you’ve received a cold call and think you’ve been targeted by a scammer, hang up the phone immediately and report the individual(s) involved to the police at actionfraud.police.uk.

    You can also report the scheme to the FCA by contacting their Consumer Helpline on 0800 111 6768 or by using their reporting form. 

*You can find the YouGov online survey results here.


ScamSmart

You can get more information on scams – and what to look out for – at fca.org.uk/scamsmart

Remember: it's not just your pension at risk. Watch this video produced by the FCA to make sure you're in the know. 

» Can you spot the investment scam?