Pension scams are on the increase. Every day criminals use sophisticated ways to con pension savers out of their money – and the COVID-19 pandemic has only made things worse. According to Action Fraud, pension savers lost £1.8 million to scams in the first three months of 2021 – an increase of 45% over the first three months of 2020.
We’re here to help you keep your hard-earned pension savings safe with our top tips for spotting and avoiding pension scams.
What is a pension scam?
It’s a fraudulent attempt to get at your pension savings. Scammers will often start by offering you something – such as a ‘pension review’ or a ‘one-off investment opportunity’. Eventually, this ‘offer’ will depend on you transferring your pension savings out, supposedly to another pension scheme but in reality, straight into the scammers’ pockets. You could lose all your pension savings and possibly also find yourself with a huge tax bill.
Things to watch out for
- Any contact about your pension that comes out of the blue – even if the caller claims to be from a government organisation such as MoneyHelper or Pension Wise. These organisations won’t contact you unless you contact them first.
- Claims that you can get at your pension savings before you’re 55 without paying large amounts of tax. You can only do this in special cases such as terminal illness. Otherwise, you could be hit with a huge tax bill.
- Website promotions, telephone calls, adverts, emails or text messages encouraging you to transfer your pension savings to get cash or a loan. You should never click on the links in these messages, as doing this can enable scammers to verify your details.
- Offers of ‘one-off’, ‘unique’ or ‘time-limited’ investment opportunities – especially if they involve transferring money abroad (which makes it harder to trace).
- Someone putting pressure on you to decide quickly – for example, sending you papers to sign by courier – or getting impatient or angry if you want to check they’re genuine. Genuine organisations won’t mind you checking that they are who they say they are, and won’t try to rush you into anything.
The FCA has produced a short video highlighting how pension scammers work. You can watch it here.
Avoiding and reporting scams
Don’t sign anything or transfer money without speaking to MoneyHelper on 0800 011 3797. Or, use the live webchat.
Pension ‘cold calling’ – when someone phones you out of the blue about your pension – is illegal and you can report them to the Information Commissioner. If you can, try to get information out of the caller, such as the name of their organisation or a number you can call them back on. You can report the call online at the Information Commissioner’s website. Or, call 0303 123 1113.
If you think you’ve already fallen victim to a scam, call Action Fraud on 0300 123 2040.
Check who you’re dealing with before changing your pension arrangements. Check the FCA’s ScamSmart website or call 0800 111 6768 to see if the firm or person you’re dealing with is authorised by the FCA.
You can find more information about pension scams at MoneyHelper or thepensionsregulator.gov.uk/pension-scams.