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Avoid pension scams

Don’t let scammers enjoy a pension saver’s retirement. Find out how pension scams work, the warning signs and the steps you can take to help pension savers avoid being scammed.

Fraudsters promise high returns and low risk but, in reality, pension savers that are scammed are usually left with nothing.

When savers realise they’ve been scammed, it can be devastating – many lose their life savings. Once the money is gone, it’s almost impossible to get it back.

You can help pension savers avoid falling victim to a scam.

How pension scams work

Anyone can be the victim of a pension scam, no matter how financially savvy they think 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 pension money is often invested in unusual, high risk investments like:

  • overseas property and hotels
  • renewable energy bonds
  • forestry
  • parking
  • storage units

Or it can be simply stolen outright.

Read our booklet on how to spot a scam (PDF, 122kb, 2 pages).

Many scammers can also persuade savers to transfer their money into single member occupational schemes, or other occupational pension schemes.

Scammers will sometimes promise savers early access to their pension pot through loans or 'loopholes'. Savers could lose all their money and face a high tax bill from HM Revenue and Customs (HMRC) if they withdraw their pension savings before the age of 55.

Savers can use Money Helper to understand their options.

All pension savers should speak to an independent adviser authorised by the Financial Conduct Authority (FCA) before making a transfer. In some cases they are required to do so.

Warning signs of a pension scam

Cold calling about pensions is illegal and a likely sign of a scam. Cold calls used to be scammers' most common method of approach. But since the cold-call ban was introduced in 2019 their tactics have evolved. Some have moved to sophisticated online models, making contact through social media, or will use friends and family to reach clusters of people. Others will rely on established practices like offering a free pensions review.

It's vital that you keep up to date with current and evolving scam tactics and get to know the signs of a scam.

Other common signs of pension scams:

  • phrases like ‘free pension review’, ‘pension liberation’, 'loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’
  • guarantees they can get better returns on pension savings
  • help to release cash from a pension before the age of 55, with no mention of the HMRC tax bill that can arise
  • high pressure sales tactics – time limited offers to get the best deal; using couriers to send documents, who wait until they’re signed
  • unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections
  • complicated investment structures
  • long-term pension investments – which often mean people who transfer in do not realise something is wrong for several years

Many of these common warning signs are considered red and amber flags which could be reason for a transfer being refused. Read more about the flags when dealing with transfer requests.

Report a scam

In England, Northern Ireland and Wales you should report fraud and cybercrime that has already happened to Action Fraud.

In Scotland, you should call Police Scotland on 101 or Advice Direct Scotland on 0808 164 6000.

Reporting scams allows authorities to investigate and prosecute scammers. It also allows law and policy makers to get a clearer picture of the effect that scams have on pensions.

If you’re concerned about a potential scam you should report your suspicions to Action Fraud (in Scotland: Police Scotland or Advice Direct Scotland) or the Financial Conduct Authority. You can also report any intelligence or concerns by contacting us.

MoneyHelper supports people that want to rebuild their pension savings. To book an appointment, email virtual.appointments@moneyhelper.org.uk.

Trustees and administrators

Trustees, administrators and scheme providers play an important role in educating and protecting members.

Help savers keep their retirement savings safe from scammers.

How you can help

You should also:

  • Take the scams module in the Trustee Toolkit and encourage all relevant staff or trustees to do so. Once you have passed the assessment you can download a certificate to show that you have completed it.
  • Attend webinars on the latest on pension scams, provided by us and other industry bodies.
  • Study and use the resources on the FCA ScamSmart webpage and the Pension Scams Industry Group (PSIG) Code of Good Practice. These are regularly updated with the latest information.
  • Consider becoming a member of the Pension Scams Industry Forum (PSIF). The aim of PSIF is to discuss pension scams or liberation developments and threats, with the overall aim being to safeguard savers’ pension pots. Contact PSIG to ask to join PSIF.

Approved financial advisers

The FCA regulates firms and individuals that provide financial advice.

Pension scammers sometimes pose as financial advisers. They may have smart-looking brochures and websites giving scam warnings, pretending to be official or government-backed. 

Professional appearances don’t guarantee that a company can be trusted. Savers should check with the FCA to make sure a firm is authorised before acting on any pensions advice they’re given.

The FCA also regulates those who operate self-invested personal pensions (SIPPs), and personal and contract-based stakeholder pension schemes. If you’re worried that a member of your scheme may have been targeted by a scam, check if the receiving pension provider is authorised by the FCA.

If you have concerns about a firm that’s listed on this register, contact firm.queries@fca.org.uk.

The Financial Services Compensation Scheme (FSCS) protects consumers who receive bad or negligent advice from a financial adviser who is authorised by the FCA. The FSCS can pay up to £85,000 per claim.

Overseas advisers and investments are unlikely to be covered by the FSCS.

Business advisers

You’re the first line of defence for your clients against pension scams – they’ll look to you for advice.

Scammers can be articulate and financially knowledgeable, making it difficult to tell between them and legitimate advisers.

Get to know how to help your clients spot the warning signs of a pension scam.

How you can help

Employers

Your staff look to you for support – your help can keep them away from pension scams.

Scams victims have lost between £1,000 and £500,000 from their pension. This is often their life savings.

Get to know your responsibilities – help your staff be ScamSmart and keep their retirement savings safe.

How you can help

Four steps to help your staff avoid pension scams

  1. Reject unexpected pension offers, whether in person, over the phone, online or through social media.
  2. Check who you’re dealing with before changing your pension arrangements – visit ScamSmart or call the FCA on 0800 111 6768 to see if the firm is authorised.
  3. Don’t be rushed or pressured into making any decision about your pension.
  4. Consider getting impartial information and advice.

Pension savers

If you save into a pension scheme, don’t let a scammer enjoy your retirement. Visit ScamSmart to find out more.

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