How to spot a pension scam

You've worked hard for your pension. Don't let the fraudsters get their hands on it.

We all want a comfortable retirement and pensions are one of the best ways of saving for this eventuality. With more flexibility than ever before in managing your pension at retirement, we've also seen a rise in pension fraud.

Previously, it was much more difficult for criminals to get their hands on someone's pension pot. Fraudsters were forced to set up fake pension schemes into which they would then have to try and persuade people to transfer their money. But with the pension freedom reforms, people now have easy access to their pension savings and that makes those savings easier to access by fraudsters.

What types of pension fraud are there?

There are a number of ways that scam artists will try and relieve you of your pension pot.

The free pension review

This is one of the most popular scams and one of the most successful due to the beneficial and harmless sounding nature of their offering. Customers are contacted on the doorstep, by telephone, text or email and are offered a free pension review. This, of course, isn't a review at all…

The one-off investment opportunity

The last few years have been relatively poor for savers, with interest rates remaining low. Everyone wants to maximise their pension pot and it is this desire upon which this scam relies.

The pension liberation scam

This type of scam typically targets those savers under the age of 55 and is also known as a pension loan, early pension release or simply cashing in your pension early. Unlike the other scams, pension liberation is completely legal but is almost certainly never a good idea.



How to spot a fake free pension review

It is a good idea to review your pension regularly. But the free pension review scam is one of the most popular scams and one of the most successful due to the beneficial and harmless sounding nature of their offering. You might be contacted in a number of ways:

On the doorstep: The most direct method where you will open the door to be confronted by someone offering to review your pension arrangements in the comfort of your own home. Very often they will have very convincing identification and will be smartly dressed with authentic looking documentation.

By telephone: The most common method of communication - but cold calling about pension schemes has now been banned. If you've ever failed to tick or untick the correct box on a form to state that you do not wish to be contacted by third parties, your data could have been bought by any number of companies, both reputable and not so reputable. You may be told they are calling from your current pension provider or that they are calling from some sort of official body.

By text: As mentioned , you may have inadvertently let your telephone number fall into the hands of scammers. You may receive a text offering a free pension review and, if you reply, you may then be called by one of the fraudsters.

What is the scam?

The scam is to 'review' your pension and then make claims that try to take your funds away from you. Of course, it isn't a review at all, and you will be encouraged to move your pension pot into a 'more lucrative investment vehicle' with the promise of high returns and/or greater safety for your money.

How to protect yourself

  • Do not give out any personal information over the phone.
  • Check their details against the FCA website: www.fca.org.uk/register. However, don't assume that the person you are talking to is the person on the register.
  • If they say they are from an official body such as The Pensions Regulator, they are not being truthful. Official bodies such as this do not offer this kind of service and do not conduct themselves in this manner.
  • Do not sign or do anything until you have taken advice from a trusted financial adviser who can advise you on such matters.


How to spot a fake one-off investment scam

The one-off investment opportunity scam plays on the fact that the last few years have seen relatively low interest rates and returns for both savers and investors.

How do they contact you?

As with many other pension scams, you can be contacted in a number of ways.

On the doorstep: With a smart appearance and with convincing identification and information, the one-off investment opportunity is a scam that relies on high pressure sales tactics, so is particularly suited to door-to-door prospecting.

By telephone: cold-calling about pensions in the UK has been illegal since January 2019. If you receive a call about your pension from an organisation you don't know, it is safe to assume that it is a scam. Fraudsters will always have ways and means to get hold of telephone numbers, so do not assume that, because you always tick or untick the box that says you do not want your number passed on, any call you receive is always genuine. There are numerous unscrupulous companies willing to pass on your details regardless of whether they have your permission or not. You may be called numerous times by the fraudsters who will use high pressure sales tactics.

By text: You may be contacted by text and, should you reply, this will open the doors for them to bombard you with calls to try and relieve you of your pension.

What is the scam?

Over the past few years, many people have seen poor returns from their pension investments, due to the global financial crunch and other factors that have resulted in poor growth for many pension pots. In this scam, fraudsters talk up the poor growth of many pension investments whilst encouraging you to transfer your pension pot into a more lucrative investment vehicle. The returns are often said to be 'guaranteed' and are way above the level of growth almost any other investment can offer.

These investments are often based overseas and are almost certainly not regulated in any way. The worst case scenario is that you will lose your entire pension pot because the investment does not actually exist. The best case scenario is that the investment vehicle does exist but you will almost certainly not get anywhere like the returns promised. In fact, you will probably get less than if you had left it in your original pension pot, as it may be poorly managed and will almost certainly have excessive fees and charges.

How to protect yourself

  • Do not give out any personal information over the phone.
  • Check their details against the FCA website: www.fca.org.uk/register. However, don't assume that the person you are talking to is the person on the register.
  • If they say they are from an official body such as The Pensions Regulator, they are not being truthful. Official bodies such as this do not offer this kind of service and do not conduct themselves in this manner.
  • Do not sign or do anything until you have taken advice from a trusted financial adviser who can advise you on such matters.


How to spot the pension liberation scam

Whilst the free pension review and one-off investment scams are out-and-out frauds and almost always illegal, pension liberation can actually be a perfectly legal and legitimate thing to do. But it's almost never a good investment idea and should not be thought of as any less of a scam than other tactics used by fraudsters.

How do they contact you?

Pensions liberation companies may use a variety of methods to contact you.

On the doorstep: This is not generally the way that most pension liberation companies will contact people, as there are far more targeted and effective methods that they can use. However, you should still always remain extremely wary of anyone selling or offering financial services on the doorstep.

By telephone: This is the most widely used method of communication by companies offering pension liberation services. Because they are generally targeting people below the age of 55 who may be experiencing financial difficulties, there is a ready supply of leads available from companies who offer debt management and other related services that target those in financial difficulties. If you are under 55 and have ever had contact with this type of company and did not explicitly tick or untick the box preventing your number from being passed on, then you could very well be contacted by a pension liberation company.

By text: This is another common method of contacting people who might be interested in pension liberation your number will have been obtained from a debt management agency or a provider of telephone data.

What is the scam?

This type of scam typically targets those savers under the age of 55, and is also known as a pension loan, early pension release or cashing in your pension early. Even with the latest reforms, savers still cannot take their pension pot without penalties until the age of 55. That means the offer of being able to take money out BEFORE this can be very attractive to some people, especially if they are in financial difficulties.

Pension liberation is legal but is almost certainly not a good idea in almost every situation. Whilst taking up to 25% of your pension over the age of 55 is completely tax free, taking money out of your pension earlier than this age is classed as an 'unauthorised payment'. That means you can be liable for up to a huge 55% rate of tax on the withdrawal, as well as charges from the pension liberation company of up to 30%.

How to protect yourself

Do not think that because pension liberation is perfectly legal this means it is a good idea. It almost never is. Just because a company is registered in the UK and has glossy marketing materials, it does not always make it a legitimate and sensible financial proposition.

  • Do not give out any personal information over the phone.
  • Check their details against the FCA website: www.fca.org.uk/register. However, don't assume that the person you are talking to is the person on the register.
  • If they say they are from an official body such as The Pensions Regulator, they are not being truthful. Official bodies such as this do not offer this kind of service and do not conduct themselves in this manner.
  • Do not sign or do anything until you have taken advice from a trusted financial adviser who can advise you on such matters.




The pension scam warning signs to watch for

As time goes on, fraudsters and their methods are becoming more and more sophisticated, which means it can be increasingly difficult to tell the difference between a genuine financial offering and a scam. However, there are some tell-tale signs that can help you spot if what you are being offered is a scam.

Being cold-called - If you have been contacted door-to-door, by telephone or by text message, completely out of the blue then you should be wary. It does not necessarily mean that it is a scam but these are the ways that pension fraudsters will get in touch with you.

Pressure - If you are being pressured into making a decision about your pension then you should be aware that you may be being scammed. Reputable advisors and companies are bound by a professional code of conduct and would never use such tactics.

Unclear contact details - If the contact details you have been given are only a website or just a mobile number or PO Box then you should be proceed with caution. If you are given a physical address, google it; you may find that it is a 'virtual' office address, another favourite tactic of fraudsters.

By telephone: Fraudsters will always have ways and means to get hold of telephone numbers, so do not assume that, because you always tick or untick the box that says you do not want your number passed on, any call you receive is always genuine. There are numerous unscrupulous companies willing to pass on your details regardless of whether they have your permission or not. You may be called numerous times by the fraudsters who will use high pressure sales tactics.

By text: You may be contacted by text and, if you reply, this will open the doors for them to bombard you with calls to try and relieve you of your pension.

What is the scam?

Over the past few years, many people have seen poor returns from their pension investments, due to the global financial crunch and other factors that have resulted in poor growth for many pension pots. In this scam, fraudsters talk up the poor growth of many pension investments whilst encouraging you to transfer your pension pot into a more lucrative investment vehicle. The returns are often said to be 'guaranteed' and are way above the level of growth almost any other investment can offer.

These investments are often based overseas and are almost certainly not regulated in any way. The worst case scenario is that you will lose your entire pension pot because the investment does not actually exist. The best case scenario is that the investment vehicle does exist but you will almost certainly not get anywhere like the returns promised. In fact, you will probably get less than if you had left it in your original pension pot, as it may be poorly managed and will almost certainly have excessive fees and charges.

How to protect yourself

If the investment returns promised sound too good be true, it probably is.

  • Do not give out any personal information over the phone.
  • Check their details against the FCA website: www.fca.org.uk/register. However, don't assume that the person you are talking to is the person on the register.
  • If they say they are from an official body such as The Pensions Regulator, they are not being truthful. Official bodies such as this do not offer this kind of service and do not conduct themselves in this manner.
  • Do not sign or do anything until you have taken advice from a trusted financial adviser who can advise you on such matters.