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How to avoid pension scams

In these tough times, savers might increasingly look to transfer their pension, prompted by the instability of their employer or the financial markets. As a result, they could become vulnerable to pension scams.

The increased numbers of fraudulent lenders and schemes during COVID-19 has led the Financial Conduct Authority (FCA) to step up its targeting to mitigate these activities.

Savers could be increasingly targeted by scammers attempting to lure them to ‘safe havens’.

Those that are scammed can be left with nothing after false promises of high returns and low risk.

Victims can lose their life savings, which can be devastating. Retrieving the savings is almost impossible once the money is gone.

How pension scams work

Anyone can be the victim of a pension scam, no matter how savvy they think they are. It is 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.

New research reveals that almost 1 in 4 people (24%) surveyed, admitted to taking 24 hours or less to decide on a pension offer.

Worryingly, overconfidence could also lead to savers missing the signs of a scam. Despite nearly two-thirds (63%) saying they are confident making decisions about their pension, the same proportion (63%) would trust someone offering pensions advice out of the blue – one of the main warning signs of a scam.

As the Pensions Regulator states, ‘Scammers can be articulate and financially knowledgeable, with credible websites, testimonials and materials that are hard to distinguish from the real thing. Scammers design attractive offers to persuade you to transfer your pension pot to them or to release funds from it. The money is then invested in assets like overseas property, renewable energy bonds, forestry, storage units, or simply stolen outright.’

High risk investments include:

  • Overseas property and hotels
  • Renewable energy bonds
  • Forestry
  • Parking
  • Storage units
  • 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:

  • Phrases like ‘free pension review’, ‘pension liberation’, ‘loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’
  • Higher returns – guarantees they can get better returns on pension savings
  • Help to release cash from a pension before the age of 55, but no mention of the 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 are 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 does not realise something is wrong for a number of years.

See the FCA and Pensions Regulator ScamSmart guidance on “Four simple steps to protect yourself from pension scams”.

If you are an employer or trustee of a pension scheme you can support the ScamSmart campaign by downloading the Pensions Regulator awareness toolkit and help by:

  • Sharing our social posts
  • Promoting articles in your blogs, intranets or newsletters
  • Sending our leaflets and posters to your audience
  • The Regulator appreciates your support, which goes a long way in helping to protect consumers from harm to their pension pots.

Access more pension scams advice

The Pensions Advisory Service provides free independent and impartial information and guidance. If people aged 50 or over require free independent advice, they can contact the government-backed Pension Wise service. To book a free appointment, visit


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