Beat the scammer: 10 pension tips as pension scams take centre stage again


Pension scams are once again making headlines. New statistics from the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) show the average amount a pension scam victim loses is £91,000.

With a third of pension holders aged between 45 and 65 not knowing how to verify a claim of contact from someone saying they are a legitimate pensions adviser or provider, it’s time to raise awareness. Following these ten pension tips to avoid scammers, can help you protect your life’s savings.

1. Verify who you’re speaking to

Many pension scams start with an unsolicited call or email. The fraudster will typically claim to be a regulated adviser or provider, lulling you into a false sense of security. Despite a third of pension holders aged between 45 and 65 not knowing how to verify contact, it’s an essential and simple step.

The Financial Services Register lists the status of firms and individuals, along with contact details, permissions, and other details. It also lists firms that are providing regulated products or services without the correct authorisation, including those running scams, providing you with an alert.

You should also be aware of ‘clone firms’. These scammers will use the name and details of legitimate providers. For this reason, if you’ve received an unsolicited call, you should hang up before handing over any personal details and call the number on the register to verify the call was genuine.

2. Be wary of claims of a ‘free pension review’

Claims of a free pension review are among the most searched for scam terms, according to the FCA. The research found that one in eight people aged between 45 and 65 would trust an offer of a free pension review from someone that claimed to be a pension adviser.

It sounds intriguing and like it could be a useful step when you’re planning for retirement, making it an excellent option for scammers. Once you’ve agreed to a review, criminals will often try to persuade you to move your money into unusual investments, usually suggesting they are high return and low risk.

It’s highly unusual for professional advice on pensions to be offered for free, any form of communication out of the blue offering this should be treated with caution.

3. Conduct some research

A quick bit of research could save you thousands if you’re being targeted by pension scammers. If your suspicions have been raised or something just doesn’t feel right, make sure you take some research steps before committing to anything.

In some cases, you may find that a quick internet search reveals that others have been scammed by the same person. Another place to check is the FCA warning list, which allows you to check an investment or pension opportunity out. If a firm isn’t on the list it doesn’t necessarily mean it’s not s scam, so be sure to check the Financial Services Register too.

4. Be cautious of limited time or exclusive offers

Scammers will want you to hand over your pension as quickly as possible, reducing the likelihood that you’ll discover they’re criminals in time. As a result, they’ll usually put pressure on you to make a quick decision, sometimes framing it as a limited time offer. There have been instances of scammers sending paperwork directly to victims’ houses to obtain a quick signature.

Don’t fall into this trap. Professional financial and pension advisers understand that decisions relating to your finances are important, recognising that you’ll want to take your time to go over your options.

5. Step back if behaviour is threatening or pushy

When you’re a victim of a scam, the criminal will often start off by being friendly and professional but when it looks as though you’re not going to hand over your money, their behaviour can change. If at any point during a conversation they become pushy or threatening, take a step back and reconsider your options.

Even if someone acting in this way proves to be a regulated adviser, would you want to work with someone that took this approach? Your pension is often the accumulation of decades of working hard and saving, you want to work with a financial adviser or planner that will answer any concerns you may have.

6. Understand when your pension can be ‘unlocked’

Another common way scammers draw pension holders in is to claim they can unlock their pension before you turn 55. If you’ve been dreaming of an early retirement or your lifestyle could benefit from a lump sum paid sooner than expected, it’s certainly tempting.

However, for the vast majority of people, this simply can’t be done without incurring substantial charges. There are only two instances where this is possible and in both you should contact your pension provider directly rather than a third party. The two cases where it’s possible are if you’re suffering from a serious illness and wish to retire early or you have a protected retirement date specified in your plan.

7. Recognise high guaranteed returns are too good to be true

We all wish that there was a way to generate guaranteed high returns with no need to worry about risk. Unfortunately, it’s a sure-fire sign of a scam. Investment is all about balancing risk and return, and there is no way to guarantee you’ll benefit from high returns; if there were, everybody would want to move their money to this investment option

When you’re being approached with a pension opportunity (or any finance proposal for that matter) keep in mind that if it sounds too good to be true, it probably is.

8. Ask about associated risks

Asking a few savvy questions can help you identify potential scammers too. Ask about the associated risks of what they’re proposing and they’ll either state there’s no risk at all or downplay them; after all, they want to make their suggestions sound as appealing as possible.

Risk is an important part of any investment decision and your overall goals. A financial adviser, for example, should ask you questions to identify how much risk you’re able and prepared to take before making any suggestions. If someone isn’t willing to discuss the risks of an investment with you, it indicates they aren’t being entirely forthcoming.

9. Seek impartial advice

Impartial advice can give you just the perspective you need when you’ve been approached by a scammer or alert you if something’s not right. Seeking the expertise of a financial adviser can help you understand the best way for your pension to be invested with your circumstances in mind.

Often pension scammers will suggest moving all your money into a single investment or unusual assets, something that will be at odds with financial advice you receive. If you want to talk to a financial adviser about a pension offer you’ve received, you can contact us.

10. Report your suspicions

Even if you just have a suspicion about an unsolicited call, report it. The FCA can alert you if the firm or individual is a known scammer or investigate if necessary.

If you’ve already handed over your personal details, taking action can limit the damage too. The first organisations to contact are your pension provider and bank, they may be able to stop any transfers from happening. The FCA, Action Fraud, and The Pensions Advisory Service are all places you can turn to if you’ve been affected to seek advice on what your next steps should be.

If you’re worried about pension scams or want to discuss how to maximise your pension, contact us today.