Pension scams
Millions of people fall victim to pension scams every year. Anyone can be the victim of a pension scam, no matter how financially savvy they think they are. People may be tricked into handing over their entire pension savings to scammers.
It’s important that everyone can spot the warning signs. The tactics used by pension scammers to encourage people to transfer their pension savings to them are constantly changing. Some of the tactics include:
- offering free pension reviews or health checks
- promises of better returns on savings
- unlocking pensions before age 55, tax loopholes, pension loans or upfront cash
- time limited offers or forcing you into a quick decision; using couriers to send documents, who wait until they are signed
- contact out of the blue – cold calling about pensions is against the law. You should not be contacted by any company about your pension unless you have asked them to contact you.
Once you have transferred your pension savings into a scam it’s too late. You could end up losing all your pension savings. In some cases, you may also face a tax bill of 55% of the value of the pension you transferred.
Four simple steps to protect yourself from pension scams
Step 1 – Is the offer unexpected?
Legitimate pension providers are highly unlikely to contact you out of the blue about your pension. Be wary of free pension review offers and/or promises of high/guaranteed returns.
Step 2 – Have you checked who you’re dealing with?
The Financial Conduct Authority’s (FCA) website has a Financial Services Register - This link opens in a new browser window you can check to make sure that anyone offering you advice or services is authorised to do so. Alternatively phone 0800 111 67 68.
A firm pretending to be an authorised form is known as a ‘clone firm’ and may have a clone website that looks exactly like the real deal. Tip: double check their contact details against the register and see if they match. Always ensure a firm is FCA-authorised or you won’t be protected by the Financial Ombudsman Service or Financial Services Compensation Scheme if something goes wrong.
Step 3 – Stop and think – are you being rushed or pressured?
Pressure to act quickly or you will miss out is often a warning sign. Take your time to make all the checks you need and remember, if it sounds too good to be true, it probably is.
Step 4 – Should you seek impartial advice or guidance?
MoneyHelper Free and impartial information and guidance available online, over the phone and via webchat.
If you can, it’s a good idea to invest in speaking to a financial adviser. Often large amounts of money are at stake and they will be able to help you make the right decision for you. Tip: check any adviser you choose to use is regulated by the FCA.
Learn more about how to spot and avoid scam on the Stop! Think Fraud website.
If you suspect a scam, report it
- Report to the Financial Conduct Authority (FCA) by contacting their consumer helpline on 0800 111 6768 or using the reporting form on their website.
- Report to Action Fraud on 0300 123 2040 or on their website.
- If you are in the middle of a transfer, contact your pension fund immediately and then get in touch with MoneyHelper.