Pension scams are on the increase in the UK. Every day fraudsters are using sophisticated ways to part savers from their money and the internet and advances in digital communications mean these kinds of scams are getting more common and harder to identify. A lifetime’s savings can be lost in moments. Read this guide to find out how to spot, avoid and report pension scams.

What is a pension scam?

Pension scam victims lose an average of £91,000, say the FCA and The Pensions Regulator.

There are different types of pension scam but they can all lead to you losing a lifetime’s worth of savings in a moment.

Since April 2015 you have more choices about how you can access your pension pot than in the past. Be on high alert.

Scammers know this and will try to lure you with promises of upfront cash and one-off ‘deals’ with guaranteed high returns.

Be aware

Some scammers have very convincing websites and other online presence, which make them look like a legitimate company. Always check with the FCA to make sure they’re registered.

They might try to persuade you to cash in your pension – either the whole lot or a large sum – and hand the money to them to invest.

Watch out particularly for people contacting you out of the blue or adverts claiming to offer free pension reviews or no-obligation consultations.

How to spot a pension scam

There are some common tell-tale signs that mean it could be a scam:

  • Unsolicited approaches by phone call, text message, email or in person. Since January 2019, there has been a ban on cold calling about pensions. This means you should not be contacted by any company about your pension unless you’ve asked them to.
  • When a firm doesn’t allow you to call it back.
  • Where you’re forced to make a quick decision, are pressured into doing so, or are encouraged to transfer your pension quickly and send documents by courier.

Is it a scam?

The FCA’s ScamSmart website has a tool to help you check if an investment or pension opportunity is a scam.

There’s also lots more information about avoiding the latest scams. Visit the ScamSmart website.

  • Contact details you are given, or on their website are only mobile phone numbers or a PO box address.
  • Claim they can help you or a relative unlock a pension before the age of 55, sometimes known as ‘pension liberation’ or ‘pension loans’. Only in very rare case, such as very poor health, is this possible.
  • Say they know of tax loopholes or promise extra tax savings.
  • Offer high rates of return on your investment, but claim it is low risk.

Taking money out of your pension saving early can result in tax charges of more than half the value of the money you take out. This is on top of charges of typically 20% to 30% for entering into one of these arrangements. Your remaining pension savings will also be placed into high-risk investments.

You can find out more about spotting and avoiding pension scams from The Pensions Regulator.

Claiming to be from government backed organisation.

Top tip

Beware of official looking websites encouraging you to fill in your details. This is a trick scammers use to get around the pension cold calling ban. If you’re not sure check the FCA register or our Retirement Advisor Directory.

Some might imply that they are part of the government-backed Pension Wise service by including ‘wise’, ‘guidance’ or ‘pension’ in their name.

Pension Wise offers impartial and free information and guidance on your pension options.It will never contact you out of the blue to offer you a pension review and it has only one website: pensionwise.gov.uk.

We’ve even heard of some fraudsters saying they are from the Money Advice Service. Rest assured we will never contact you direct about this.

If you receive a call claiming to be from us – or the government – or other government-backed organisation put the phone down.

Once you’ve transferred your pension or handed over your pension savings, it’s too late. Many victims have lost their entire pension savings.

How to protect yourself from investment scams

To avoid being caught out by a pensions scam, make sure you follow these simple rules:

  1. Reject any unsolicited calls, emails, text messages or visitors to your door. Legitimate companies will not cold call or contact you out of the blue.
  2. Check the FCA register of regulated companies, or the FCA warning list.
  3. If you’re thinking about an opportunity, seek independent financial advice from an FCA regulated firm.

What to do if you think you’re being targeted

If you’ve already signed something you’re now unsure about, contact your pension provider straight away. They might be able to stop a transfer that hasn’t taken place yet.

If you think you’ve been targeted by an investment scam, please report it to the FCA Scam Smart website.

If you have lost money to a suspected investment fraud, you should report it to Action Fraud on 0300 123 2040 or online at www.ActionFraud.police.uk.

If you have doubts about what to do, ask The Pensions Advisory Service (TPAS) for help. Call them on 0300 123 1047 or visit the TPAS website for free pensions advice and information.

Beware of being targeted in the future, particularly if you lost money to a scam. Fraudulent companies might take advantage of this and offer to help you get some or all of your money back.

Pension Wise and regulated advice

If you are 50 or over, you might be eligible for a Pension Wise guidance session. Visit the Pension Wise website to find out more.

If you do need professional help only use a financial advice firm that is regulated and authorised by Financial Conduct Authority (FCA). The easiest way of being sure is to choose a firm that is registered on the Money Advice Service Retirement Adviser Directory. All the firms on our Directory are registered and authorised to offer regulated advice on pension and retirement options. Although you will have to pay for the advice, if you use a regulated professional they take the liability for any recommendation they give you – so if they get it wrong – you are covered by the Financial Ombudsman Service and the Financial Services Compensation Scheme.

Find out more from The Pensions Regulator here.

This article is provided by the Money Advice Service.