Fraudsters promise high returns and low risk. In reality, pension savers who are scammed are usually left with nothing. Many lose their life savings.
Don't let scammers enjoy a pension saver's retirement. Find out the warning signs of a scam and how you can stop pension savers from being scammed.
If you suspect a scam, you should report it to the authorities so that they can investigate.
Spot it. Discuss it. Report it.
Warning signs of a pension scam
Awareness and education around the warning signs of a pension scam is vital in helping protect savers’ retirements. Industry is best placed to identify suspicious activity and to ensure members are alert to the latest tactics.
Warn your members
Anyone can be the victim of a pension scam, no matter how financially savvy they think they are. It’s important that everyone can spot the warning signs. Watch a video case study of a pension scam victim.
Scammers are often convincingly professional, with credible websites, testimonials and materials that are hard to distinguish from the real thing. Their aim is to persuade pension savers to either transfer their entire pension savings, or release funds from it. This is often to a scheme the scammer controls.
Cold calling about pensions is illegal and likely a sign of a scam.
Some scammers have moved to sophisticated online models, making contact through social media or by using friends and family to reach clusters of people. Others rely on established practices like offering a 'free pensions review'.
Common signs of pension scams include:
- phrases like 'pension liberation', 'loan', 'loophole', 'savings advance', 'one-off investment', 'cashback'
- guarantees they can get better returns on pension savings
- help to release cash from a pension before the age of 55, with no mention of the tax bill that can arise
- high pressure sales tactics – time limited offers to get the best deal; using couriers to send documents, who wait until they're signed
- unusual high-risk investments, like property, renewable energy bonds and forestry, many of which tend to be overseas, making it difficult to check ownership or even whether the investment exists
- complicated investment structures
- fixed-term pension investments which often mean people do not realise something is wrong for several years
For more information:
- read how to spot fraud on GOV.UK
- check for known scams or find an authorised financial adviser on the ScamSmart website
Red and amber flags
Many of the same warning signs members should look out for are considered red and amber flags, which could be reason for a transfer being refused. Read more about the flags when dealing with transfer requests.
Report a scam
Reporting is the best defence against pension scams
You should report any knowledge or suspicions of pension scams and those involved. This allows authorities to investigate and prosecute scammers. It also allows law and policy makers to get a clearer picture of the degree of risk that pension scams are posing at any one time.
You should report if:
- you believe a scam has already happened
- a red flag is raised when making a transfer
- you suspect that a pension scam is taking place or are suspicious of those involved: this may be because of other risks you have noticed such as amber flags in a transfer request
You should report any relevant information because it is vital intelligence in our efforts to understand and respond effectively. This includes the name and contact details of those involved and related materials such as websites and brochures.
We must not allow scams to go unreported. You can make the difference.
Step 1: report to Action Fraud
In England, Northern Ireland and Wales you should report fraud, cyber crime or concerns about a potential scam to Action Fraud.
Report a potential scam to Action Fraud
If you live in Scotland, you should call Police Scotland on 101 or Advice Direct Scotland on 0808 164 6000.
Step 2: check whether to report to FCA or TPR
You should also report unauthorised financial advice and transfer concerns to the Financial Conduct Authority (FCA) and breaches of pensions law to The Pensions Regulator (TPR).
Unauthorised financial advice and transfer concerns
- report individuals who provide unauthorised advice on pension transfers to the FCA – you can check a financial adviser is authorised on the FCA Financial Services Register
- report concerning pension transfer requests to the FCA
- report significant increases in the volume of transfers involving the same adviser to the FCA
Whistleblowing and breaches of the law
You should also report concerns to TPR if:
- you have concerns about a statutory transfer payment that appears to meet all the requirements on paper but the warning signs of a scam are too strong for you to be comfortable
- there is a breach of the law, as set out in the reporting breaches section of our code of practice
What happens after you make a report?
The authority will review what you have reported for opportunities to investigate further. Each individual report is valuable and is considered with other reports to build a picture of intelligence.
It is unlikely that they will be able to comment on ongoing investigations due to legal reasons. However, they may contact you to obtain further information, unless you indicate you are not happy to be contacted. Information may become public, for example, if a case reaches court.
Trustee and administrator responsibilities
Trustees must:
- carry out certain checks when dealing with pension transfer requests
- direct members to Pension Wise for impartial guidance on their retirement options when they contact you about applying to access their pension savings (defined contribution schemes only)
First line of defence
Trustees often delegate these duties to administrators. As a result, administrators may have a broader picture of the pensions landscape including, for example, an increase in transfer requests to a particular scheme or handled by a particular third party. Administrators can help by reporting these to their trustee clients to give them a better picture of the risks.
Trustees and administrators – collectively, you are the first line of defence against scammers. The more you report your suspicions, the more effective our industry can be at defending savers against scammers.
Scams pledge
You should also make the pledge to combat pension scams – a commitment to follow higher standards of anti-scam practice for your scheme.
Employer and business adviser responsibilities
Your staff or clients may look to you for support. Your help can keep them away from pension scams.
You should share our booklet (PDF, 122kb, 2 pages) on the signs of a scam.
You should also make staff or clients aware of four important steps to avoid pension scams.
- Reject unexpected pension offers, whether in person, over the phone, online or through social media.
- Check who they’re dealing with before changing their pension arrangements. Visit ScamSmart or call the FCA on 0800 111 6768 to see if the firm is authorised.
- Don’t be rushed or pressured into making any decision about their pension.
- Consider getting impartial information and advice.
Pension saver responsibilities
If you save into a pension scheme, don’t let a scammer enjoy your retirement. Visit ScamSmart to find out more about known scams or to find an authorised financial adviser.
