Avoid Pension Scams

In these tough times savers might increasingly look to transfer their pension, prompted by the instability of their employer or the financial markets. 

Savers could be increasingly targeted by scammers attempting to lure them to 'safe havens'. 

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

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

How pension scams work

Anyone can be the victim of a pension scam, no matter how savvy they think they are. It is 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.

Warning signs of a pension scam

Scammers often cold call people via phone, email or text – this is illegal, and a likely sign of a scam. They often advertise online and can have websites that look official or government backed. 

Other common signs of pension scams:

• phrases like ‘free pension review’, ‘pension liberation’, 'loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’

• higher returns – 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 are 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 does not realise something is wrong for a number of years

See the FCA and Pensions Regulator ScamSmart guidance on “Four simple steps to protect yourself from pension scams“ here: https://www.thepensionsregulator.gov.uk/-/media/thepensionsregulator/files/import/pdf/16423_pensions_consumer_leaflet_screen.ashx