Fraudsters promise high returns and low risk. In reality, pension savers that are scammed are usually left with nothing. Many lose their life savings.
Don’t let scammers enjoy a pension saver’s retirement. Find out how pension scams work, the warning signs and the steps you can take to stop pension savers from being scammed.
Important
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How pension scams work
Anyone can be the victim of a pension scam, no matter how financially savvy they think they are. It’s important that everyone can spot the warning signs.
Scammers can be articulate and financially knowledgeable with credible websites, testimonials and materials that are hard to distinguish from the real thing. They try to persuade pension savers to transfer their entire pension savings, or 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.
Many scammers also persuade savers to transfer their money into pension schemes that the scammer controls.
Scammers will sometimes promise savers early access to their pension pot through loans or 'loopholes'. Savers could lose all their money and face a high tax bill from HM Revenue and Customs (HMRC) if they withdraw their pension savings before the age of 55.
Savers can use pensions and retirement guidance from MoneyHelper to understand their options.
Pension savers should speak to an independent adviser authorised by the Financial Conduct Authority (FCA) before making a transfer. In some cases they are required to do so.
Check for known scams or find an authorised financial adviser on the FCA ScamSmart website.
Warning signs of a pension scam
Cold calling about pensions is illegal and a likely sign of a scam.
Some scammers have moved to sophisticated online models, making contact through social media or using friends and family to reach clusters of people. Others rely on established practices like offering a 'free pensions review'.
It's vital that you keep up to date with current and evolving scam tactics and get to know the signs of a scam.
Other common signs of pension scams:
- phrases like ‘pension liberation’, 'loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’
- 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’re signed
- unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections
- complicated investment structures
- fixed-term pension investments – which often mean people who transfer in do not realise something is wrong for several years
Many of these common warning signs are considered red and amber flags which could be reason for a transfer being refused. Read more about the flags when dealing with transfer requests.
Report a scam
You should report any knowledge or suspicions of pension scams and those involved. This allows authorities to investigate and prosecute scammers. It also allows law and policy makers to get a clearer picture of the effect that scams have on pensions.
You should report if:
- you believe a scam has already happened
- a red flag is raised when making a transfer
- you suspect that a pension scam could be taking place or are suspicious of those involved: this may be because of other risks you have noticed such as amber flags in a transfer request
You should report any relevant information including the name and contact information of those involved, and related materials such as websites and brochures.
Fraud, cyber crime and potential scams
In England, Northern Ireland and Wales you should report fraud, cyber crime or concerns about a potential scam by submitting a crime report or an information report to Action Fraud. Register as a business user and then submit your report.
If you are making multiple reports, you can request access to an Expert Reporting Tool by emailing City of London Police. Your request will be reviewed to ensure the tool is appropriate for the reports you wish to make before access is given.
You should encourage victims to report scams online to Action Fraud or by phone on 0300 123 2040. If they live in Scotland, you should ask them to call Police Scotland on 101 or Advice Direct Scotland on 0808 164 6000.
Once you have reported to Action Fraud, you should also report to the FCA and The Pensions Regulator (TPR) where relevant.
Unauthorised financial advice and transfer concerns
You can check a financial adviser is authorised on the FCA Financial Services Register.
Report individuals who provide unauthorised advice on pension transfers to the FCA.
For all transfers of concern, email the FCA.
Report significant increases in the volume of transfers advised by the same adviser to the FCA.
Whistleblowing and breaches of the law
You should also report concerns to TPR if:
- you feel you have to refuse a statutory transfer payment even though all of the requirements are met and you consider the request valid but the warning signs of a scam are too strong for you to be comfortable with any other course of action
- there is a breach of the law, as set out in the reporting breaches code of practice
What happens after you report a scam
Once you have reported a scam the authority will review it for opportunities to investigate further. It is unlikely that they will be able to comment on ongoing investigations due to legal reasons.
Trustees and administrators
Trustees must:
- carry out certain checks when dealing with pension transfer requests
- direct members to Pension Wise for impartial guidance on their retirement options after their minimum retirement age (defined contribution schemes only)
You should also make the pledge to combat pension scams.
Employers and business advisers
Your staff or clients may look to you for support. Your help can keep them away from pension scams.
You should share our booklet (PDF, 122kb, 2 pages) on the signs of a scam.
You should also make staff or clients aware of four important steps to avoiding pension scams:
- Reject unexpected pension offers, whether in person, over the phone, online or through social media.
- Check who you’re dealing with before changing your pension arrangements. Visit ScamSmart or call the FCA on 0800 111 6768 to see if the firm is authorised.
- Don’t be rushed or pressured into making any decision about your pension.
- Consider getting impartial information and advice.
Pension savers
If you save into a pension scheme, don’t let a scammer enjoy your retirement. Visit ScamSmart to find out more about known scams or to find an authorised financial adviser.
