Your pension is one of your most valuable assets, for many it offers financial security throughout retirement and the rest of their lives. But, like anything valuable, your pension can become the target for illegal activities, scams or inappropriate and high risk investments.
It’s good to remember that pension scams can take many forms and usually appear to most, to be a legitimate investment opportunity. But, pension scammers are clever and know all the tricks to get you to hand over your savings. They target anyone and everyone, pressuring you into transferring your pension savings, often into a single investment.
The investments are normally overseas, where you have no consumer protection, and typically promise you a high guaranteed rate of return (typically 7 or 8% or higher). These are often false investments in luxury products, property, environmental solutions or storage and parking, which often don’t exist or are extremely high risk with low returns.
Remember, once you’ve transferred your pension into a scam, it’s often too late.
The information below will help highlight how scams work, what the consequences are and how you can protect your pension.
- You might find it helpful to use our dedicated 'Identifying a pension scam' tool; and
- You can also read the individuals booklet provided by The Pensions Regulator for more information about scams. To read this please click here.
You should be aware that pension scammers have been using The Pension Regulator’s anti-scam materials and leaflets on their websites in an effort to look like a legitimate business. Please be vigilant and always check with us first before proceeding.
How to spot a scam
Here are some common features that may indicate that what you are being offered is a pension scam:
- Being approached out of the blue; by text, phone call, email or your front door
- Offers or mentions of ‘one-off investments’, time bound offers, upfront cash incentives, ‘free pension reviews’ , ‘legal loopholes’ or 'government initiatives'
- Recommendations of transferring your money into a single overseas investment, with returns of 8% or higher
- The promise to get you access to your pension before the age of 55
- Claims that they are from a legitimate organisation like ours, the Pension Service, Pension Wise
- Visits from a courier or personal representative to pressure you to sign paperwork and speed up your transfer.
- There may be an authentic looking website, but these can be cloned from legitimate organisations
- There will be little or nothing in the way or contact names, addresses or phone numbers
You can also read the individuals booklet provided by The Pensions Regulator for more information about scames. To read this please click here.
What happens when you transfer into a scam?
If you transfer your pension savings into a scam, you run the very real risk of losing a significant, if not all of your pension savings, as well as facing high commission or arrangement fees.
Additionally, accessing your pension early is only allowed in very special circumstances, such as ill health. If you access and transfer your pension before the age of 55, you will this will classify as an ‘unauthorised payment’ from your pension fund. This will result in significant tax penalties and HMRC can impose a charge of up to 55% of the value of your pension.
This means that at the end of the transaction you may just get little or nothing of your original investment back, and also owe money to HMRC.
How to protect your pension from scams
There are a number of things you can do to help avoid scammers and protect your pension:
- Be wary if you’re approached out of the blue. Reputable companies and official organisations don’t typically make unsolicited calls and are happy to be called back.
- Always check the Financial Conduct Authority register to make sure an adviser or company is registered before you agree to anything.
- You should ask the scheme that you are transferring from to check the new scheme's HMRC registration- they can make sure if it is a legitimate scheme.
- Never be rushed into making a decision. Pensions are for the long-term, so if you’re being pressured to make an immediate decision and it doesn’t feel right, take a pause and check with us.
- Always read any paperwork properly and understand exactly what it means for the security of your pension and personal information, before you sign anything.
- If you have any concerns about the offer you’ve received, always check with us first 0300 123 1047. It’s better to be safe than sorry.
- Try using our dedicated tool, which can help you to identify if what you're being offered is a potential scam.
You can also read the individuals booklet provided by The Pensions Regulator for more information about scams. To read this please click here.
What to do if you think you’ve been or are being scammed
If you think you might have already been targeted and you’ve agreed to transfer your pension, you should:
1. Contact your pension provider immediately- they may be able to stop the transfer if it has not already gone through.
2. Contact Action Fraud 0300 123 2040 and report the scam.
If your money has been transferred and you’re unable to contact the organisation or find out where your money is, or haven’t received any notifications for some time, it’s likely that it’s a scam and your funds have been lost. You should:
1. Contact Action Fraud 0300 123 2040 and report it.
2. Think about your financial position. This might be a difficult time, but when you’re ready it might be helpful to speak to our team, as you may need to think about how your retirement is affected and how best to start saving back into a pension.
How we can help
If you're a victim of a pension scam, fraud or pension liberation exercise, you may be struggling with a range of financial or personal isues during this time. You may need help with the pension options available to you going forward. Unfortunately, it is unlikely that we can put you back into the financial position you were in before. However, it might be helpful to discuss the situation with a Technical Specialist from our team and to consider next steps.
In addition to talking to you about your situation, we may suggest you access our bespoke appointment service, which can take you through some of the things you might want to consider when looking at rebuilding your savings. Please contact us direct if you feel that this is relevant to you.
Serious Fraud Office: Storage pod investment schemes
The Serious Fraud Office are seeking information about the Capita Oak Pension and Henley Retirement Benefit schemes, as well as other storage pod investment schemes. The investigation includes the Westminster Pension Scheme and Trafalgar Multi Asset Fund. If you have invested in any of these schemes please visit the Serious Fraud Office website here.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.