Pension scams

Beware of pension scams

You may have seen the advert – ‘don’t let a scammer enjoy your retirement’ – on TV. It features a man on a jet-ski having a great time on holiday while he enjoys spending your hard-earned pension savings.

Sadly, pension scams are very common. Scammers target people with any pension savings at all, and the average victim loses around £91,000 each.

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 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 on a deal
  • When a 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 the promises above, it’s best to hang up the phone or, at the very least, do some more research before you 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 that it’s a scam. It’s actually illegal to cold call anyone about their pension, so if you are receiving an offer from a company that you’ve never dealt with before (or even one you have), it may be a scam. Don’t be afraid to hang up the phone and don’t hand over any personal details.

2 Check who you’re dealing with

The FCA gave a dedicated page called ScamSmart where you can search whether the person or organisation who are making you the offer are authorised. ScamSmart also has tools to take you through the details of the offer to help you see if you’re being scammed.

If you’ve used ScamSmart and you’re still not sure, you can call the FCA Consumer Helpline on 0800 111 6769. 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 all the time that you need to make all the checks that you need to – even if this means turning down what seems to be an amazing deal. 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. And as a general rule of thumb – if it 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’s worth taking the time to make sure that what you’re doing is right. In some cases, you actually have to get advice before you transfer anything out of your pension savings.

A good place to start, is to contact The Pensions Advisory Service – they offer free, independent and impartial guidance for people with defined contribution pension savings.

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.

The Pensions Advisory Service (TPAS)

The Pensions Advisory Service offer very thorough information on how to spot a scam, what to do if you think you have been scammed and what help and support they offer. Read more on The Pensions Advisory Service website.

A letter about transfers from the TPR, FCA and TPAS

Download a letter from The Pensions Regulator, the Financial Conduct Authority and The Pensions Advisory Service that tells you what to watch out for if you are considering transferring your pension.