Beat the Pension scammers

Pension scam victims lose an average of £91,000, according to the Financial Conduct Authority (FCA) and The Pensions Regulator.

Victims could lose some, or all, of their pension savings, and face a tax bill of up to 55% (there can be high charges if you withdraw your pension savings early), or huge additional fees. Arm yourself with the facts to protect yourself today.

How do pension scams work?

Scammers aim to convince victims to transfer their pension pot to them, or release funds from it. There are three steps:

• Contact
• Convince
• Con

CONTACT:

A pension scam often starts by someone contacting a potential victim unexpectedly by phone, email or text. The ‘too good to be true’ opportunity that they offer involves:

• Investing their victim’s pension money, or other business opportunity
• Taking the victim’s pension money before they’re 55

Sometimes scammers don’t contact victim’s directly. Some advertise online, so beware of copycat websites – some websites can look like they’re official government services when they’re not. Or they may have targeted a cluster of people by getting a victim to unwittingly recommend them to friends and family.

What you need to know

Unsolicited phone calls, text or emails about your pension are nearly always scams. In fact, nuisance calls about pensions are illegal. You can report them to the Information Commissioner's Office on 0303 123 1113

It's not against the law to access the money in your pension before the age of 55, but it's not recommended due to the large fees you'll be charged.

CONVINCE:

Scammers make false claims designed to build their credibility and gain a victim’s trust. They may say:

• They are authorised by the FCA or that they don’t have to be FCA authorised because they aren’t providing the advice themselves
• They are acting on the behalf of the FCA or the government service Pension Wise

According to Pension Wise website, scammers:

• Guarantee they can get better returns on pension savings
• Describe opportunities using worlds such as ‘unique’, ‘overseas’, ‘environmentally friendly’, ‘ethical’ or in a ‘new’ industry
• Use words uses words like ‘pension liberation’, ‘loan’, ‘loophole’, ‘free pension review’ or ‘one-off investment’.

Once they have victims on the hook, they often use high pressure sales tactics. These can include limited time offers to get the best deal; asking victims to transfer their money quickly; sending documents by courier or waiting for them to be signed.

What you need to know

Use this checker to see if your adviser is registered on the FCA website and that they’re authorised to give advice on pensions.

If you deal with someone who is not regulated, you may not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.

Overseas opportunities may be unregulated with no consumer protections.

Remember: no legitimate adviser would pressurise you into making a rush decision about your pension money.

CON:

When the scammers do persuade a victim to transfer their pension pot to them, or release funds from it, it is often:

• Invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, storage units.
• Invested in more conventional products but within an unnecessarily complex structure which hides multiple fees and high charges.
• Stolen outright.

What you need to know

Once a victim has paid their money into a scam, it’s too late.

How can I protect myself?

The good news is that protecting yourself is easier than you think:

• Reject unexpected offers. Ignore unsolicited calls, emails, text messages or visitors to your door. Legitimate companies will not cold call or contact you in this way.
• Check who you’re dealing with. Check the FCA register of regulated companies or the FCA warning list. Don't be talked into something by someone you know, even a friend or family member. They could be getting scammed. Check everything yourself.
• Take your time. Make all the checks you need - no matter how long it takes. Be wary of promised returns that sound too good to be true and don’t be rushed or pressured into making a decision.
• Get impartial information or advice. If you want to change your pension arrangements, seek independent advice and guidance:
  • The Pensions Advisory Service provides free independent and impartial information and guidance.
  • If you’re over 50 and have a defined contribution pension, Pension Wise offers pre-booked appointments to talk through your retirement options.
  • You can also use a financial adviser to help you make the best decision for your own personal circumstances. Make sure they are regulated by the FCA and never take investment advice from the company that contacted you, as this may be part of the scam (especially if they offer a free pension review, or advice).

What should you do if you believe you are being targeted by a pension scammer?

If you think you may be targeted by a pension scam:

• Call Action Fraud on 0300 123 2040 or to report it online.
• Speak to The Pensions Advisory Service if you’ve been unexpectedly contacted by someone about your pension: 0800 011 3797.