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 – Reject unexpected offers
If you’re contacted out of the blue about a pension opportunity, chances are it’s high risk or a scam.
If you get a cold call about your pension, the safest thing to do is to hang up – it’s illegal and probably a scam. If you get texts or emails out of the blue, you should ignore them. You can report nuisance calls and messages to the Information Commissioner’s Office (ICO).
Be wary of offers of free pension reviews. Professional advice on pensions is not free.
Don’t be talked into something by someone you know, even a friend or family member. They could be getting scammed. Check everything yourself.
Step 2 – Check who you’re dealing with
Check the Financial Services Register to make sure anyone offering you advice or other financial services is FCA authorised, and they have permission to provide you with those services.
If you need help checking, call FCA’s helpline on 0800 1116768.
Make sure the firm you are dealing with is not a clone – a common scam is to pretend to be a genuine FCA authorised firm. Always use the contact details on the Financial Services Register, not the details the firm gives you.
Check the directors’ names and whether the firm is registered with Companies House. Search the company name and the directors’ names to see if others have posted any concerns.
You can also check the FCA warning list. This will show you if the firm is operating without authorisation.
Step 3 – Don’t be rushed or pressured
Take your time to make all the checks you need. Be wary of promised returns that sound too good to be true and don’t be pressured or rushed into making a decision.
Step 4 – Get impartial information or advice
You should consider seeking financial guidance or advice before making any decision about your pension. See the Financial advice page for information on how to do this.
You will be required by law to take independent financial advice if you want to transfer your LGPS pension to a defined contribution scheme and the value of your pension benefits is more than £30,000.
MoneyHelper provides free independent and impartial information and guidance.
You can read more about how to Avoid pension scams on the Pension Regulator’s website or on the FCA’s 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.