Life & Living

Pension Scam

Matthew Keay

Carl Lamb

Chartered Financial Director

Pension fraudsters prey on our concerns about financial market uncertainty. Carl Lamb shares some of the warning signs that you might be looking at a financial scam.

Financial fraud attacks are something that many of us see on a daily basis – calls, emails and texts supposedly from your bank or telling you that you’ve missed courier deliveries have become commonplace.  Hopefully we are all now wary of clicking on links in unsolicited emails or responding to people who try to get our bank details from us.

However, pension fraud is perhaps less easy to spot and instances of attempted fraud have rocketed.  Sophisticated scammers have redoubled their efforts during the pandemic and are worryingly convincing.  The Financial Conduct Authority (FCA), which regulates the financial services sector, recently reported that fraudsters had targeted pension schemes to the value of over £2 million in the first five months of 2021.  

One of the most successful ways that fraudsters tap into their prey is to offer a free online pension review, advertised on the internet.  A few quick questions later and you are being persuaded that they can help you grow your pension to a level not achievable in your current arrangement or access your fund early.  You give them your hard-earned pension savings and they sail off into the sunset, never to be seen again – probably in a yacht bought with
your money…

There are some very basic steps you can take to protect yourself from pension fraud.  Firstly, you need to understand that you cannot access your UK pension savings until you reach the minimum retirement age, which is currently age 55.  If you take it out before then, you may be hit with a tax charge – even if fraudsters have run off with your money.  You can move your pension savings from one UK pension scheme to another, but it must into be a registered UK scheme.  

Secondly, you must ensure that the person giving you advice is a properly authorised financial adviser.  You can check out the person and/or the firm they work for via the FCA website at  Advice from an authorised adviser is covered by the Financial Services Compensation Scheme, giving you redress if anything should go wrong.  In addition, the FCA website has a warning list of investments and opportunities that may be scams.  

A clear sign that you may be talking to a fraudster would be them putting pressure on you to make a quick decision.  Time-limited offers may be fine for online shopping, but decisions about your pension should not involve offer deadlines.  

The FCA recommends an approach to possible scams which they call “flipping the context”.  They suggest that if you see something online that is tempting you, imagine it being said in real life to you in the local pub.  If you wouldn’t fall for the patter there, don’t fall for it online.

I cannot stress too strongly how important it is to be vigilant and cautious when looking at taking any action with your pension savings.  If you want to explore improving your retirement planning, get advice from an independent financial adviser, ideally from a firm of Chartered Financial Planners whose name you know and trust.

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