The end-goal of scammers is to persuade you to transfer your pension savings to a place where they can get their hands on your cash. They don’t care who you are or that their scam could ruin your life, so be alert to the warning signs.

Be wary of companies that contact you out of the blue, such as cold-calls, emails or texts, no matter how trustworthy or official they seem. Remember, don’t be rushed or pressured into making any decisions about your pension. Once a scammer has your money, it can be impossible to get it back.

So, avoiding the scam entirely is your best form of defence against these threats. Fraudsters promise high returns and low risk. In reality, pension savers that are scammed are usually left with nothing. Many lose their life savings. Don’t let scammers enjoy a pension saver’s retirement.

Find out how pension scams work, the warning signs and the steps you can take to stop pension savers from being scammed.

How pension scams work

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.

Scammers can be articulate and financially knowledgeable with credible websites, testimonials and materials that are hard to distinguish from the real thing.

They try to persuade pension savers to transfer their entire pension savings, or release funds from it, by making attractive-sounding promises they have no intention of keeping.

The pension money is often invested in unusual, high-risk investments like:

• overseas property and hotels
• renewable energy bonds
• forestry
• parking
• storage units

Or it can be simply stolen outright.

Many scammers also persuade savers to transfer their money into pension schemes that the scammer controls. Scammers will sometimes promise savers early access to their pension pot through loans or ‘loopholes’. Savers could lose all their money and face a high tax bill from HM Revenue and Customs (HMRC) if they withdraw their pension savings before the age of 55.

Warning signs of a pension scam

Cold calling about pensions is illegal and a likely sign of a scam. Some scammers have moved to sophisticated online models, making contact through social media or using friends and family to reach clusters of people.

Others rely on established practices like offering a ‘free pensions review’. It’s vital that you keep up to date with current and evolving scam tactics and get to know the signs of a scam.

Other common signs of pension scams:

• phrases like ‘pension liberation’, ‘loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’
• guarantees they can get better returns on pension savings
• help to release cash from a pension before the age of 55, with 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’re signed
• unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections
• complicated investment structures
• fixed-term pension investments – which often mean people who transfer in do not realise something is wrong for several years

Many of these common warning signs are considered red and amber flags which could be reason for a transfer being refused.

Report a scam

You should report any knowledge or suspicions of pension scams and those involved to The Pensions Regulator. This allows authorities to investigate and prosecute scammers. It also allows law and policy makers to get a clearer picture of the effect that scams have on pensions.

You should report if:

• you believe a scam has already happened
• a red flag is raised when making a transfer
• you suspect that a pension scam could be taking place or are suspicious of those involved: this may be because of other risks you have noticed such as amber flags in a transfer request

You should report any relevant information including the name and contact information of those involved, and related materials such as websites and brochures.

Talk to us

If you would like to talk to us about pension or estate planning, the beneficiaries of your pension, or any of the matters in this article, please get in touch. Our financial advisers can help you to navigate your financial aims in the most tax efficient manner.

PLEASE NOTE: Grosvenor Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority do not regulate tax planning, estate planning, or wills. The value of investment can go down as well as up and you may not get back the original amount you invested. Tax treatment is dependent on individual circumstances and may be subject to change. Tax planning is not regulated by the Financial Conduct Authority.