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 articulate and financially knowledgeable, with credible-looking websites, testimonials and materials that are hard to distinguish from the real thing.
How pension scams work
Scammers usually contact people out of the blue via phone, email or text, or even advertise online. Or they may be introduced to you by a friend or family member who is also unknowingly being scammed.
Scammers will make false claims to gain your trust. For example:
- Claiming they are authorised by the FCA or that they don’t have to be FCA authorised because they aren’t providing the advice themselves.
- Claiming to be acting on the behalf of the FCA or the government service Pension Wise.
Scammers design attractive offers to persuade you to transfer your pension pot to them (or to release funds from it). It is then often:
- Invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, storage units.
- Invested in more conventional products but within an unnecessarily complex structure which hides multiple fees and high charges.
- Stolen outright.
The warning signs
Scam offers often include:
- Free pension reviews.
- Higher returns – guarantees they can get you better returns on your pension savings.
- Help to release cash from your pension even though you’re under 55 (an offer to release funds before age 55 is highly likely to be a scam).
- High-pressure sales tactics – the scammers may try to pressure you with ‘time-limited offers’ or even send a courier to your door to wait while you sign documents.
- Unusual investments – which tend to be unregulated and high risk, and may be difficult to sell if you need access to your money.
- Complicated structures where it isn’t clear where your money will end up.
- Arrangements where there are several parties involved (some of which may be based overseas) all taking a fee, which means that the total amount deducted from your pension is significant.
- Long-term pension investments – which mean it could be several years before you realise something is wrong.
4 simple steps to protect yourself from pension scams
Step 1 - reject unexpected offers
If you’re contacted out of the blue about a pension opportunity, chances are it’s high risk or a scam.
If you get a cold call about your pension, the safest thing to do is to hang up - it’s illegal and probably a scam. Report pension cold calls to the Information Commissioner’s Office (ICO).
Be wary if you’re contacted about any financial product or opportunity and they mention using your pension.
If you get unsolicited offers via email or text you should simply ignore them. Fortunately, most people do reject unsolicited offers – our research suggests that 95% of unexpected pension offers are rejected.
Be wary of offers of free pension reviews. Professional advice on pensions is not free – a free offer out of the blue (from a company you have not dealt with before) is probably a scam.
And don’t be talked into something by someone you know. They could be getting scammed, so check everything yourself.
Step 2 - check who you're dealing with
Check our Financial Services Register to make sure that anyone offering you advice or other financial services is FCA authorised, and they are permitted to provide those services in relation to pensions.
If you need any help checking, call our Consumer Helpline on 0800 111 6768.
Check they are not a clone – a common scam is to pretend to be a genuine FCA-authorised firm (called a ‘clone firm’). Always use the contact details on our Register, not the details the firm gives you.
If you use an unauthorised firm, you won’t have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) so you’re unlikely to get your money back if things go wrong.
If you use an authorised firm, access to the Financial Ombudsman Service and FSCS protection will depend on the investment you are making and the service the firm is providing.
Check to see if they are registered with Companies House and for the names of the directors. Search the company name and the names of the directors online to see if others have posted any concerns.
Check the FCA Warning List – use our tool to check the risks of a potential pension or investment opportunity. You can also search to see if the firm is known to be operating without our authorisation.
Step 3 - don't be rushed or pressured
Take your time to make all the checks you need – even if this means turning down an ‘amazing deal’. Be wary of promised returns that sound too good to be true and don’t be rushed or pressured into making a decision.
Step 4 - get impartial information or advice
You should seriously consider seeking financial guidance or advice before changing your pension arrangements.
- The Pensions Advisory Service provides free independent and impartial information and guidance.
- If you’re over 50 and have a defined contribution pension, Pension Wise offers pre-booked appointments to talk through your retirement options.
- You can also use a financial adviser to help you make the best decision for your own personal circumstances. If you do opt for an adviser, make sure they are regulated by the FCA and never take investment advice from the company that contacted you, as this may be part of the scam. Find out more about getting financial advice.
If you suspect a scam, report it
- Report to the FCA – you can report an unauthorised firm or scam to us by contacting our Consumer Helpline on 0800 111 6768 or using our reporting form.
- Report to Action Fraud online or by calling 0300 123 2040.
- If you've agreed to transfer your pension and now suspect a scam, contact your pension provider straight away. They may be able to stop a transfer that hasn't taken place yet. If you are unsure of what to do contact the Pensions Advisory Service for help.
- If you have already invested in a scam, fraudsters are likely to target you again or sell your details to other criminals. The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.
Further information on pensions
You can read more about your pension options.
You can find out more about workplace pensions and automatic enrolment at gov.uk.
Support the campaign
If you are an employer, adviser, or pension provider, you can help protect your staff, clients or members from pension scams by sharing our campaign resources.
If you are a trustee, visit The Pensions Regulator’s website for information and help on how to protect your members from scammers. You’ll also find a checklist that you can use if your scheme member asks for a transfer to help stop them getting scammed.