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How are individuals targeted by pension scams?

An increasing number of companies are targeting savers with pension scams claiming that they can help them take their pension cash early. Individuals may be targeted through websites, mass texting or through cold calls. Individuals should be very wary about giving out information in response to a text or cold call. They should always make sure that they know who they are dealing with.

Types of pension scams to watch out for

Pension scams can take many forms. Some scams will appear to be legal, and some scammers may even suggest that the Government has asked them to contact you.

Watch out for these common features of pension scams:

  • Phrases like ‘one-off investment opportunities’, ‘free pension review’, ‘legal loopholes’, ‘cash bonus’, ‘government endorsement’.
  • Victims are approached out of the blue over the phone, via text messages or in person door to door.
  • Transfers of your money overseas.
  • Access to pension before age 55.
  • No member copy of any documentation.
  • Victims are encouraged to speed up transfer of their money to the new scheme.

Pensions professionals and trustees can find more information on pension scams, including a number of example scenarios, in our pension scams action pack:

What action are we taking to tackle pension scams?

The Pensions Regulator continues to investigate reports of pension scams and will continue to work with the pensions industry, other government agencies and law enforcement agencies to ensure liberation is prevented, deterred and disrupted.

Our powers to ensure that members are protected include the:

  • suspension and / or prohibition of trustees
  • appointment of new trustees to schemes
  • issuing of financial penalties
  • freezing and repatriating pension scheme monies.

Delaying transfer payments

We are not able to waive a trustee’s legal duty to carry out a transfer within 90 days. Trustees have a duty to carry out such a transfer wherever the legislative requirements are met. This includes that the member has made a valid application to the trustee.

We can’t predetermine any future regulatory action we may take. However, where the transferring trustees or administrators can provide evidence for concerns that member funds may be at risk, then this would be a factor that to consider when deciding whether to take action in respect of the non-payment of a transfer.

For example, a trustee may obtain evidence that following a member’s transfer, cash would be passed back to the member before their normal minimum pension age. We would give this factor significant weight when assessing whether it would be appropriate to pursue any action in relation to a non-payment of a transfer.

It is expected that trustees or managers will be able to demonstrate that they have taken steps to establish the legitimacy of an arrangement where they have delayed making a transfer for that reason. If you’re concerned about processing a transfer request you may wish to seek your own legal advice.

Approved financial advisers

The Financial Conduct Authority (FCA) regulates firms and individuals that provide financial advice. If someone claims to be a financial or pension adviser then members can check with the FCA to make sure they are approved. It’s important that members check this before they act on any pensions advice that they receive.

The FCA also regulates those responsible for operating personal and contract-based stakeholder pension schemes. If you are concerned that a member of your scheme may have been targeted by a scam, then you can check whether the receiving pension arrangement is authorised by the FCA.

Visit www.fca.org.uk/register to perform these checks. If you have concerns about a firm or individual appearing on this register contact firm.queries@fca.org.uk.

Tax-registered pension schemes

HM Revenue and Customs (HMRC) is responsible for administering and collecting taxes. This includes an online registration service for UK pension schemes so that they can receive tax relief on contributions.

The pension tax rules protect the tax relief given on pension savings. These rules are designed to make sure that pension savings are used to produce an income throughout a saver’s retirement. They set out how and when pension savings can be accessed, as well as the tax charges that apply where the conditions are not met. If a member has accessed their funds improperly, ‘unauthorised payment charges’ will apply.

For a checklist of features of a potential scam, including non-registration for tax purposes, see our action pack for trustees and administrators. If a scheme isn’t registered for tax purposes, then do not process a transfer and notify Action Fraud.

Next steps if you have concerns about pension scams

For more information and resources about pension scams – including what to do and who to contact if you have concerns – see the relevant section below:

IFAs, pension providers and administrators

Trustees

Individuals

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