Millions of people fall victim to pension scams every year. Anyone can be the victim of a pension scam, no matter how financially savvy they think they are.
It's important that everyone can spot the warning signs. The tactics used by pension scammers to encourage people to transfer their pension savings to them are constantly changing. Some of the tactics include:
- offering free pension reviews or health checks
- promises of better returns on savings
- unlocking pensions before age 55, tax loopholes, pension loans or upfront cash
- time limited offers or forcing you into a quick decision; using couriers to send documents, who wait until they are signed
- contact out of the blue – cold calling about pensions is against the law. You should not be contacted by any company about your pension unless you have asked them to contact you.
The Financial Conduct Authority have produced a leaflet which explains how pension scams work, how to avoid them and what to do if you suspect a scam. For further details please view the Pension Scams leaflet (PDF).
Listed below is a summary of the Financial Conduct Authority's (FCA) four key steps to protect yourself from pension scams.
If you're contacted out of the blue about a pension opportunity, chances are it is either a high risk offer or a scam.
If you get a cold call about your pension, the safest thing to do is to hang up – it's illegal to cold call about pensions and probably a scam. If you get texts or emails out of the blue, you should ignore them. Report nuisance calls and messages to the Information Commissioner's Office (ICO).
Be wary of offers of free pension reviews. Professional advice on pensions is not free.
Don't be talked into something by someone you know, even a friend or family member. They could be getting scammed without knowing. We recommend that you check everything yourself.
Check the Financial Services Register to make sure anyone offering you advice is FCA authorised, and they have permission to provide you with those services.
If you need help checking, you can call FCA's helpline on 0800 1116768.
Make sure the firm you are dealing with is not a clone. A common pension scam involves pretending to be a genuine FCA authorised firm. Always use the contact details on the Financial Service Register, not the details the firm gives you, and make sure you have completely hung up on any calls.
Check the directors' names and whether the firm is registered with Companies House. Search the company name and the directors' names to see if others have posted any concerns.
We also recommend that you check the FCA warning list. This will show you if the firm you are considering are operating without authorisation.
Take your time to make all the checks you need. Be wary of promised returns that sound too good to be true. Don't be pressured or rushed into making a decision there and then.
You should consider seeking financial guidance or advice before making any decision about your pension.
You will be required by law to take independent financial advice if you want to transfer your LGPS pension to a defined contribution scheme and the value of your pension benefits is more than £30,000.
You can read more about how to Avoid pension scams on the Pension Regulator's website.
For further details on each step visit the FCA scam prevention site.
In this short film Pauline shares her story of how scammers stole her £45k pension fund. Watch Pauline's experience to find out more about her story and learn about warning signs to look out for.