Scammers are targeting pension pots of all sizes – make sure you know how to avoid pension scams
Pension scams are targeting pension pots of all sizes and the average victim loses £91,000 each.
Pension scams can be hard to spot and are often disguised with credible websites, testimonials and materials which make them look like the real thing. The scammers can be articulate and financially knowledgeable.
How pension scams work
Scammers usually contact people out of the blue via phone, email or text, or even advertise online.
They design attractive offers to persuade you to transfer your pension pot to them (or to release funds from it). It is often then:
- 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; or
- simply stolen outright.
Pension scams warning signs
Scam offers often include:
- Free pension reviews
- Higher returns – guarantees they can get you better returns on your pension savings
- Help to release cash from your pension, even though you’re under 55 (an offer to release funds before age 55 is highly likely to be a scam).
- High pressure sales tactics – the scammers may try to pressure you with ‘time limited offers’ or even send a courier to your door to wait while you sign documents.
- Unusual investments – which tend to be unregulated and high risk, and may be difficult to sell if you need access to your money.
- Complicated structures where it isn’t clear where your money will end up.
- Long-term pension investments – which mean it could be several years before you realise something is wrong
How to spot pension scams
To help you spot the signs and protect yourself from a scam, the Financial Conduct Authority (FCA) and Pensions Regulator suggest following four simple steps.
Step 1 – Reject unexpected offers
If you’re contacted out of the blue about a pension opportunity, chances are it’s a scam. Pension cold calling is illegal, and you should be very wary. An offer of a free pension review from a firm you’ve not dealt with before, is probably a scam. And don’t get talked into something by someone you know. They could be getting scammed, so check everything yourself.
Step 2 – Check who you’re dealing with
Search ScamSmart and check the Financial Services Register to make sure anyone offering you advice is authorised and they’re permitted to give pension advice. If you need any help checking you can call the FCA Consumer Helpline on 0800 111 6768.. Check they are not a clone – a common scam is to pretend to be a genuine FCA authorised firm. Use the contact details on the Financial Services Register, not the detail the firm gives you.
If you don’t use an FCA-authorised firm, you risk not having access to compensation schemes.
Step 3 – Don’t be rushed or pressured
Take your time to make all the checks you need – even if this means turning down what seems to be an ‘amazing deal’.
Step 4 – Get impartial information or advice
It’s important you make the best decision for your own personal circumstances. You should seriously consider seeking financial advice before changing your pension arrangements. In some cases, for example where you are wanting to transfer more than £30,000 from a DB scheme, you must obtain this advice. Make sure the adviser is regulated by the FCA!
If you suspect a pension scam, report it.
You can report an un-authorised firm or scam to the FCA using the online reporting form or on 0800 111 6768.
If you suspect a scam, report it to Action Fraud on 0300 123 2040 or at www.actionfraud.police.uk.
Be ScamSmart with your pension. To find out more, visit www.fca.org.uk/scamsmart
You can also download our Protecting yourself from scams guide.
Our FCA Registration number is 185513 and you can view our registered advisers on the FCA Registration https://register.fca.org.uk/
You can also read about our advisers on Our People page which includes their photo for identification.