Scammers are targeting pension pots of all sizes. Make sure you know how to spot the warning signs and how to keep your pension safe.
Scammers appear professional and it’s becoming increasingly harder to spot the difference between something that’s credible and something that’s fraudulent. Scammers can be articulate and financially knowledgeable, with credible websites, testimonials and materials that are hard to distinguish from the real thing.
How pension scams work
Scammers usually contact people out of the blue via phone, email or text, or even advertise online. Scammers 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.
The 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.
4 simple steps to protect yourself from pension scams
The Pension Scams Action Group has put together a checklist to go through if you’re ever approached about your pension.
Step 1 – Is the offer unexpected?
- If you’re contacted out of the blue about a pension opportunity, chances are it’s high risk or a scam. If you get a cold call about your pension, the safest thing to do is to hang up – it’s illegal and probably a scam.
- Be wary of offers of free pension reviews. Professional advice on pensions is not free – a free offer out of the blue from a company you have not dealt with before is probably a scam.
- And don’t be talked into something by someone you know. They could be getting scammed, so check everything yourself.
Step 2 – Have you checked who you’re dealing with?
- The Financial Conduct Authority’s (FCA) website has a Financial Services Register you can check to make sure that anyone offering you advice or services is authorised to do so.
- A firm pretending to be an authorised firm is known as a ‘clone firm’ and may have a clone website that looks exactly like the real deal. Tip: double check their contact details against the register and see if they match. Always ensure a firm is FCA authorised or you won’t be protected by the Financial Ombudsman Service or Financial Services Compensation Scheme if something goes wrong.
Website: https://register.fca.org.uk/s/ Phone: 0800 111 67 68
Step 3 – Stop and think – are you being rushed or pressured?
- Pressure to act quickly or you will miss out is often a warning sign. Take your time to make all the checks you need and remember, if it sounds too good to be true, it probably is.
Step 4 – Get impartial information or financial advice
You should seriously consider seeking financial guidance or advice before changing your pension arrangements.
• MoneyHelper – provides free independent and impartial information and guidance. Phone: 0800 138 3944 or https://www.moneyhelper.org.uk/en
• Pension Wise – If you’re over 50 and have a defined contribution (DC) pension, Pension Wise offers pre-booked appointments to talk through your retirement options at: Phone: 0800 011 3797 or https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise
• Financial advisers – It’s important you make the best decision for your own personal circumstances, so you should seriously consider using the services of a financial adviser. If you do opt for an adviser, be sure to use one that is regulated by the FCA and never take investment advice from the company that contacted you or an adviser they suggest, as this may be part of the scam.
If you suspect a scam, report it.
• Report to Action Fraud – If you suspect a scam you should report it to Action Fraud on 0300 123 2040 or at https://www.actionfraud.police.uk/
• If you’ve agreed to transfer your pension and now suspect a scam, contact your pension provider straight away. They may be able to stop a transfer that hasn’t taken place yet. If you are unsure of what to do contact MoneyHelper for help on 0800 011 3797.
Be ScamSmart with your pension. To find out more, visit https://www.fca.org.uk/scamsmart
Stop! Think Fraud
Learn more about how to spot and avoid scams at https://stopthinkfraud.campaign.gov.uk/ Download