Don’t let a scammer enjoy your retirement – find out how pension scams work, how to avoid them and what to do if you suspect a scam.
Pension scams can be hard to spot. Scammers can be convincing and financially knowledgeable, with credible looking websites, testimonials and materials that are hard to distinguish from the real thing.
Have you been approached about accessing your pension benefits early? How can you tell if this is a genuine offer or a scam?
A scam could not only result in the loss of your entire pension but also leave you with a huge tax bill.
In recent years, scams have been on the increase with fraudsters claiming to be able to help people release tax-free cash from their pension pot before age 55. However, the earliest age you can legally start taking your benefits from your pension pot (except for ill-health early retirement) is age 55.
Pension scams often involve attractive offers that aim to persuade you to transfer your pension pot (or release funds from it). Promises of high and guaranteed rates of return or incentives to transfer are also common indicators. If you’re worried about money and want to use your pension to repay debts, contact a free debt adviser first to find out what your options are. Use MoneyHelper’s debt advice locator tool to find free debt advice near you.
It can be hard to tell if you are being scammed as scammers are increasingly sophisticated and appear to be financially knowledgeable with genuine-looking websites and documents to back up their claims. They have even been known to pose as people who are there to help you, such as the Pensions Regulator or Pension Wise. However, government agencies would NEVER contact you in this way.
Scam tactics include:
- Contact out of the blue.
- Promises of high/guaranteed returns.
- Free pension reviews.
- Access to your pension before age 55.
- Pressure to act quickly.
To transfer a Defined Benefit (DB) pension with a value over £30,000, the government requires you to have obtained financial advice from an FCA regulated adviser qualified to advise on DB pension transfers. Be wary if your financial adviser provides a recommendation not to transfer in your financial report, but encourages and helps you to transfer anyway. You can contact MoneyHelper if you have concerns at any time. Find out if the defined benefit (DB) pension transfer advice you received was right for you using the Financial Conduct Authority advice checker : https://www.fca.org.uk/consumers/pension-transfer-defined-benefit/advice-checker
To help you make better decisions, take time to understand both the opportunites and risks of any investment your’re considering. Conisder the FCA’s 5 questions to ask before you invest https://www.fca.org.uk/investsmart/5-questions-ask-you-invest
Simple ways to protect yourself:
- Reject unexpected offers.
- Check who you’re dealing with.
- Don’t be rushed or pressured.
- Get impartial information and advice.
If you have been approached about accessing your pension benefits and have any concerns about it being a genuine offer, the trustee strongly advises you to contact Isio on 0800 122 3590 or email them at email@example.com.
Visit the ScamSmart pages of the Financial Conduct Authority (FCA) website to learn about; how a pension scam works; the different types of pension scam; pension scam warning signs; four steps to protect yourself and what to do if you think you’ve been scammed. These are some useful sites to help you protect yourself from pension scams:
FCA’s ScamSmart website:
The Pension Regulator’s (TPR) pension scams guide:
FCA information on transfers from defined benefits schemes:
TPR, FCA and the Money and Pensions Service transfer warning:
CETV Member Letter PDF
Isio have a robust process in place to help detect and report pension scam cases. However, the people who carry out these scams often change their methods in order to avoid detection, so we urge members to remain vigilant at all times.
From 30 November 2021, trustees and scheme managers must ensure specific checks are made before complying with a member’s request to transfer their pension. The regulations require trustees to carry out due diligence on statutory transfers and to refuse a statutory transfer or refer the member to guidance if the due diligence shows certain risk indicators.
The checks will determine whether the request meets the conditions to enable a statutory right to transfer, including whether a member is required to have guidance from MoneyHelper. There are certain circumstances, referred to as red and amber flags, which mean that a statutory transfer cannot proceed, or where a member must obtain guidance from MoneyHelper before the transfer may proceed. A letter detailing the due diligence process is provided following receipt of an application to transfer.
If you are worried that you may be a victim of a pension scam, please contact us on 0800 122 3200 or call Action Fraud on 0300 123 2040.