How to avoid pension scams

Pension scammers are using increasingly sophisticated methods to try to tempt savers into fraudulent investment opportunities.

Victims of pension scams lost an average £50,949 each in the first few months of 2021, more than double the previous year¹, with reported losses ranging from under £1,000 to as much as £500,000. 

Here, we explain how pension scams work and what you can do to protect your hard-earned savings.

How do pension scams work?

Pension scams can be hard to spot. Scammers often seem financially knowledgeable and may have credible-looking websites and testimonials. They tend to make false claims to gain your trust, such as pretending to be authorised by the Financial Conduct Authority (FCA), or claiming they don’t have to be authorised because they aren’t providing advice themselves. 

Scammers usually contact people out of the blue. They may offer free pension reviews, guarantees of higher returns, or help releasing cash from your pension even though you’re under 55. These offers are designed to persuade you to transfer your pension pot or release funds from it. The money is then invested in unusual and high-risk investments offering returns that are too good to be true; invested in more conventional products but within a complex structure hiding multiple fees and high charges; or simply stolen outright. 

Scammers typically use high-pressure sales tactics, such as ‘time-limited offers’ or even sending a courier to your door to wait while you sign documents. 

What can you do?

If you’re contacted out of the blue about a pension opportunity, it is most likely high risk or a scam. Pension cold calls are illegal and should be reported to the Information Commissioner’s Office. Always ignore unsolicited pension offers and do not divulge financial or personal information. 

Get as much information as you can about the company’s background. Make sure anyone offering advice or other financial services is FCA authorised, and that they are permitted to provide you with those services. Beware ‘clone firms’ who pretend to be genuine regulated firms – double-check every detail; look out for subtle differences; check the FCA’s ScamSmart warning list; and always use the contact details on the Financial Services Register, not the details the firm gives you.

Never be rushed, pressured, or harassed into making a decision about your pension. You might be offered a bonus or discount if you invest before a set date or told that the opportunity is only available for a short period. Be wary of promised returns that sound too good to be true, and of fake reviews and claims from other clients who have invested or would like to be ‘in on the deal’.

Consider taking impartial financial advice before changing your pension arrangements.

More information

For more information about identifying and reporting pension scams, read the dedicated FCA and Action Fraud guidance here:

https://www.fca.org.uk/scamsmart
https://www.actionfraud.police.uk/news/dont-let-a-scammer-enjoy-your-retirement

¹ https://www.fca.org.uk/news/press-releases/scammers-target-pension-pots

The value of investments, and any income from them, can fall and you may get back less than you invested. Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.