Pension savings can provide financial security for many people during retirement and for the rest of their lives. For others, a pension can help support their career choices and provide for those who are most important to them.
Pensions are one of the most important and valuable assets that people have. Unfortunately, pensions, like any valuable asset, can become the target of fraudulent, inappropriate, or scam-related activities.
Our CEO and Independent Financial Adviser, Dominic James Murray, shares top tips on how to spot a UK pension scam and avoid getting scammed in the YouTube video below. If you want more clear and practical guidance on pensions and retirement planning, explore our YouTube channel.
Strengthening Trustee’s Duties
The UK government is aware of the urgency of preventing people from becoming victims of UK pension scams, which can harm people's future as well as their financial situation. The creation of new regulations is one of the government's progressive actions.
The Financial Conduct Authority (FCA) strengthened the trustee role with the new regulations that went into effect in November 2021 in order to be more proactive in preventing the UK pension scam. Pension administrators must now actively look for signs of a UK pension scam whenever someone requests a transfer.
This might involve rejecting a pension transfer linked to an arrangement that pays out benefits before age 55 (the earliest age most people can access their pension) or one that promises a tax-free lump sum larger than HMRC allows after 55.
Some companies offer members the opportunity to cash out their pension benefits early by transferring their pension savings to them. Scammers often entice people with pension loans or cash incentives. They may also encourage investing the transfer payment into high-risk investments or promise returns that are highly unlikely to materialise.
Such information can be extremely misleading and, in some cases, fraudulent and illegal.
While many transfers to Self-Invested Personal Pensions (SIPPs) are legal and require appropriate advice, pension administrators now warn members about a growing trend of scammers using SIPPs to lure people into fraudulent schemes. Transferring to a SIPP demands extreme caution.
The pension administrator will advise you to consider whether the funds you intend to invest are regulated by the FCA. The regulator, the ombudsman, or government compensation schemes do not protect unregulated investment funds.
How to Spot a UK Pension Scam?
Remember that UK pension scams can take many forms and frequently appear to be legitimate investment opportunities. Pension scammers, however, are astute and know all the ploys to entice you to hand over your savings. Aside from the increased regulation, you can also take proactive steps to avoid becoming a victim of a UK pension scam.
The following warning signs can help you spot a UK pension scam:
- Have you been contacted unexpectedly? Ignore any contact, whether by phone, email, social media, text, letter, or even on your doorstep! Any unexpected phone calls, emails, or text messages should be avoided. Even if the person appears to know some basic information about you, don't believe them. Cold calling in relation to pensions is now prohibited by the government and should be reported to the Information Commissioner's Office (ICO).
- Offers or mentions of one-time investments, time-limited offers, upfront cash incentives, free pension reviews, legal loopholes, or government initiatives are all signs of a UK pension scam.
- Recommendations for making a single overseas investment that will yield 6-8 percent per year or more is a sign of a scam. Remember that investments can go up as well as down, and if something seems too good to be true, it most likely is!
- The scam is the promise to give you access to your pension before the age of 55. You can only access your pension before age 55 in very limited circumstances, such as serious illness.
- Scammers can clone genuine-looking websites and marketing materials from legitimate businesses. They may also pretend to be from legitimate organisations. However, the right pension service will never contact you without first obtaining your permission.
- Scammers may claim to be regulated advisers and show official-looking documents, but that doesn’t guarantee they are legitimate. Many recent scams have tricked individuals by giving them a false sense of security about an adviser’s status.
How to Avoid UK Pension Scams?
Depending on what stage of a scam you believe you are in, you may need to take different steps. To assist you in this process, we have outlined two different scenarios below. If you suspect someone has targeted you and you’ve recently agreed to transfer your pension, take the following steps immediately:
- STEP 1. Contact your pension provider immediately. They may be able to stop the transfer if it has not already gone through.
- STEP 2. Contact Action Fraud on 0300 123 2040 and report the scam. Action Fraud will collect the information and issue you with a police crime reference number. Reporting your experience of action fraud may provide vital intelligence that prevents others from falling victim.
- STEP 3. Report a regulated financial adviser or unauthorised adviser to the FCA by contacting their Consumer Helpline on 0800 111 6768 or by using this link.
If you transferred your money some time ago and can’t contact the organisation, locate your funds, or receive any paperwork, and you believe you’ve been scammed, take the following steps:
- STEP 1: Report it to Action Fraud at 0300 123 2040. Action Fraud will collect the information and provide you with a police crime reference number. Reporting your experience with action fraud may provide vital information that prevents others from becoming victims.
- STEP 2: Call The Pensions Advisory Service (TPAS) and request a Pension Loss Appointment if you’ve transferred your pension money and worry that you’ve lost it or fallen victim to a scam.
Cameron James – Your Trusted Guide in Avoiding UK Pension Scams
Cameron James is a leading independent financial adviser for Final Salary and SIPP pension transfers. With over ten years of experience, we now support clients across 26 countries, offering fully regulated and transparent pension advice.
Our expert team understands the complex risks associated with UK pension scams. We combine technical knowledge with regulated solutions to help clients make safe and informed decisions when transferring their pensions. We have experience with UK nationals, expats and US residents.
With a commitment to transparency, sophisticated cash flow modelling, and deep experience navigating international pension regulations, we are here to protect your future.
Do not risk your retirement savings. If you're concerned about pension fraud or need guidance on a safe pension transfer, speak to a qualified adviser today.
👉 Book your free, no-obligation consultation now and take control of your pension security.