A short guide to pensions scams, and how to avoid them
Pension scams are becoming an increasing concern as fraudsters take advantage of unsuspecting individuals, particularly those nearing retirement. Preying on individuals’ lack of awareness, these scammers offer fraudulent schemes that promise unrealistic returns which can lead to devastating financial losses. In 2023 alone, pension scams reportedly cost UK pensioners £30 million, highlighting the urgency of understanding how to protect your hard-earned savings.
It is essential to be aware of the red flags, take proactive measures to safeguard your pension and learn from the real-life stories of others.
Understanding pension scams
Pension scams typically involve fraudsters contacting you through unsolicited calls, emails, or social media messages. They often offer “too good to be true” investment opportunities that seem legitimate on the surface but could lead to the loss of pension savings. Common schemes include high-risk investments, such as unregulated overseas ventures, or promises of cashing out a pension early before the age of 55.
The scammer will usually push for a quick decision, offering to help you transfer your pension funds into another account, sometimes using a “special” or “exclusive” opportunity. The reality is, that once the funds are transferred, they are often lost with no chance of recovery.
How to spot a pension scam
If you’re considering a pension investment or transfer, ask yourself these key questions:
- Did they contact you out of the blue?
- Are they promising guaranteed high returns?
- Are they pressuring you to act fast?
- Can you verify their credentials?
If any of these red flags appear, stop immediately and seek professional financial advice.
Sarah’s loss
Sarah, a 62-year-old administrator from Camberwell is one of many victims who have been defrauded of their life savings through a pension scam. In 2019, Sarah was contacted by a smooth-talking investment advisor who promised her a pension investment that could guarantee her a substantial lump sum and income within a few months.
The advisor assured Sarah that her pension would be invested in a safe, tried and tested overseas off-plan property scheme, with returns of up to 20% annually.
The opportunity seemed legitimate but had a short time window and was nearing oversubscription. Sarah, keen to secure her financial future, decided to transfer her £150,000 pension savings into the scheme.
A promising investment turned costly mistake
At first, Sarah received regular updates showing her investment’s growth. However, after a few months, communication stopped. Contact attempts were futile and the website was down. Sarah soon realised that the company was fake. She had been scammed, and her pension savings were gone.
Sarah was devastated. She had worked for over 30 years, and now, in her retirement, she was left with nothing but a sense of betrayal. Sadly, this is a common outcome for victims of pension scams.
How to protect yourself
If this is causing you worry, here are some steps you can take to avoid being the victim of a scammer.
- If you receive unsolicited calls, emails, or social media messages about pension opportunities, be wary.
- Always check whether on the FCA’s website that the company is authorised.
- If an investment promises high returns with little risk, it’s a major red flag.
- Be cautious of any firm claiming they can help you access your pension before age 55.
- Always remember, if something sounds too good to be true, it probably is.
If in doubt, seek a second opinion from a regulated financial adviser before making any decisions.
What to do if you’ve been targeted by a pension scam
If you suspect a scam, take action immediately:
- Report it to the Financial Conduct Authority (FCA) and use the ScamSmart website.
- Report the scam to Action Fraud.
- If you’ve started a pension transfer, stop it immediately – Contact your provider and seek help from The Pensions Advisory Service.
The faster you act, the better your chances of minimising any financial damage.
Protect your retirement – get trusted financial advice
Pension scammers are targeting individuals of all ages.
However, by staying informed and seeking advice from a regulated financial adviser, you can safeguard your retirement savings.
To ensure your pension is secure, speak with one of our regulated financial advisers today.
- Call us at [Your Firm’s Phone Number]
- Email us at [Your Firm’s Email]
- Request a free consultation [Link to Contact Page]
Staying vigilant and consulting a qualified professional, local financial adviser can help to protect your retirement.
Frequently asked questions about pension scams
Here are a handful of questions you may ask after reading our guide to pension scams.
What is a pension scam?
A pension scam is a fraudulent scheme where scammers trick individuals into transferring their pension savings into high-risk or non-existent investments. These scams often promise guaranteed high returns, early pension access, or exclusive investment opportunities, but ultimately lead to financial losses with little chance of recovery.
How can I tell if a pension investment is a scam?
Common warning signs include unsolicited contact, promises of high returns with low risk, and pressure to act quickly. Scammers often offer free pension reviews or claim they can help you access your pension before age 55. Always verify companies with the Financial Conduct Authority (FCA) before making any decisions.
Are all pension cold calls scams?
Yes, in most cases. Since 2019, cold calling about pensions has been banned in the UK. If you receive an unsolicited call, text, or email about pension opportunities, it is likely a scam. Never share your pension details and report the attempt to the Information Commissioner’s Office (ICO) or FCA.
Can I get my money back from a pension scam?
Recovering money from a pension scam is difficult, but acting quickly increases your chances. Contact your pension provider to see if the transfer can be stopped. Report the scam to the FCA and Action Fraud. Seeking legal advice or financial guidance may help explore possible recovery options.
How can I verify if a financial adviser is legitimate?
Check if the adviser is registered with the FCA by searching the Financial Services Register at register.fca.org.uk. Avoid advisers recommended by companies that cold contact you, as they may be part of a scam. Always call the FCA helpline to verify their legitimacy.
