Pension scams
Beware of pension scams
Sadly, pension scams are all too common. It doesn’t matter how little or how much you’ve saved into your pension, scammers can target anyone – with the average victim losing around £91,000.
Scams are hard to spot and are often disguised with credible websites, testimonials and materials which make them look like the real thing.
Some typical signs of a scam
- Someone contacting you out of the blue (also known as ‘cold-calling’) which is now illegal if it’s related to your pension
- Promises of high returns on investment
- Offers of a free pension review
- Promises that you can cash in all of your pension before the age of 55
- Pressure to make a decision quickly
- The company won’t let you call them back
- Offers of helping you use tax loopholes to your advantage
If you are contacted by someone who makes any of these promises, it’s best to end the call or, at the very least, do more research if you do decide to speak to them again.
How to protect yourself from pension scams
To help you spot the signs, and protect yourself from a scam, the Financial Conduct Authority (FCA) and the Pensions Regulator suggest following four simple steps:
1 Reject unexpected offers
If anyone calls you out of the blue about a pension opportunity, the chances are it’s a scam. It’s now illegal to cold-call anyone about their pension so, if you are receiving an offer from a company you’ve never dealt with before (or even one that you have), it may be a scam. Don’t be afraid to end the call and make sure you don’t hand over any personal details.
2 Check who you’re dealing with
The FCA has a dedicated ScamSmart page you can use to search whether the person or organisation who has approached you is authorised. ScamSmart also has tools to take you through the details of any offer you’ve been made to help you identify if you’re being scammed.
If you’ve used ScamSmart and you’re still not sure whether the offer you’ve been made is trustworthy, you can call the FCA Consumer Helpline on 0800 111 6768. They’ll be able to tell you whether the organisation or person you are dealing with is permitted to give pension advice.
If you don’t use an FCA-authorised company, you risk not having access to compensation schemes if things go wrong.
3 Don’t be rushed or pressured
Take time to make all the checks you need to – even if this means turning down what seems to be the opportunity of a lifetime. Scammers will often put pressure on people to act quickly to avoid missing out on an ‘amazing deal’. This is so that they can convince you to give them your money before you’ve had time to think about it properly. As a general rule of thumb – if an offer sounds too good to be true, it probably is.
4 Get impartial information or advice
Most people spend their whole working life building up their pension savings, so it really is worth taking the time to make sure that what you’re doing is right. In some cases, you have to get advice before you transfer anything out of your pension savings.
A good place to start is by getting in touch with MoneyHelper who offer free government-backed independent and impartial guidance about pensions and retirement.
If you have defined contribution savings and you’re over 50, you can also book a free Pension Wise appointment to discuss the options you have for accessing your DC savings with a trained pensions specialist.
5 If you suspect a scam, report it
You can report an unauthorised firm or scam to the FCA using their online reporting form or by calling 0800 111 6768.
If you suspect a scam report it to Action Fraud at www.actionfraud.police.uk or by calling 0300 123 2040.
Be scam smart with your pension. To find out more, visit www.fca.org.uk/scamsmart
Other useful information about scams
Before you consider transferring your pension, we’d also recommend you look at the following websites and helpful materials.
The Pensions Regulator
The Pensions Regulator has lots of detailed information on their website about how to protect yourself from pension scams including a useful booklet which outlines what scams look like, how you can protect yourself, and what to do if you think you might be being scammed.
ScamSmart
The Financial Conduct Authority’s ScamSmart website provides lots of useful information about how to spot a scam, how to check out what you are being offered is legitimate and many other useful resources.
If you have defined benefit (DB) pension benefits and are considering transferring them, the FCA has also created some useful guidance.
MoneyHelper
MoneyHelper offers lots of information about how to spot and protect yourself from a pension scam, and what to do if you think you have been a victim of one. Find out more on the MoneyHelper website.
A letter about transfers from TPR, the FCA and TPAS
For information on what to watch out for if you’re thinking about transferring your pension, read a letter from The Pensions Regulator, the Financial Conduct Authority and The Pensions Advisory Service (TPAS is now part of MoneyHelper).
