Your pension is one of your most valuable assets, and for many it offers financial security throughout retirement and the rest of their lives. But, like anything valuable, your pension can become the target for illegal activities, scams or inappropriate and high-risk investments.
Fraudsters promise high returns and low risk, but in reality, pension savers who are scammed can be left with nothing. When savers realise they’ve been scammed, it can be devastating – many lose their life savings. Once the money is gone, it’s almost impossible to get it back.
How pension scams work
Anyone can be the victim of a pension scam, no matter how savvy they think they are. It’s important that everyone can spot the warning signs.
Scammers try to persuade pension savers to transfer their entire pension savings, or to 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
- Storage units
Or it can be simply stolen outright.
Warning signs of a pension scam
Scammers often cold call people via phone, email or text – this is illegal, and a likely sign of a scam. They often advertise online and can have websites that look official or government-backed.
Other common signs of pension scams:
- Being approached out of the blue: by text, phone call, email or at your front door
- Phrases used like ‘free pension review’, ‘pension liberation’, ‘loan’, ‘legal loopholes’, ‘savings advance’, ‘one-off investment’, ‘cashback’, ‘government initiatives’
- Recommendations of transferring your money into a single overseas investment, with returns of 8% or higher
- 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 HM Revenue & Customs (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
- Long-term pension investments – which often mean people who transfer in do not realise something is wrong for a number of years
- Claims that they are from a legitimate organisation like ours, the Pension Service, Pension Wise
- Visits from a courier or personal representative to pressure you to sign paperwork and speed up your transfer
- There may be an authentic-looking website, but these can be cloned from legitimate organisations
- There will be little or nothing in the way of contact names, addresses or phone numbers
Scams can take many forms
Many scammers persuade savers to transfer their money into single member occupational schemes, or other occupational pension schemes.
It’s good to remember that pension scams can take many forms and usually appear to most to be a legitimate investment opportunity.
What to do if you think you’ve been or are being scammed?
If you think you might have already been targeted and you’ve agreed to transfer your pension, you should:
- Contact your pension provider immediately – they may be able to stop the transfer if it has not already gone through
- Contact Action Fraud on 0300 123 2040
If you require further assistance contact one of our independent financial advisers here.