How to spot a pensions scam

One in five over-50s have been targeted by a pensions scam between May 2017 and July 2017, according to a recent study carried out by Retirement Advantage. They found that a growing number of scammers are using sophisticated techniques to convince individuals to hand over their savings.

Ros Altmann, the former Pensions Minister, sums up the situation well: “Scammers aim to catch you off guard so they can steal your hard-earned savings. They wreck people's lives; it is as plain and simple as that.”

The good news is that the government is responding to this worrying trend. The Pensions Advisory Service (TPAS), which provides free information to the public on pension issues, is piloting a 'pre-scam' prevention scheme. This means companies can refer customers who encounter scammers to TPAS’s free and independent helpline. TPAS is also testing a 'post-scam' service to assist those who have already fallen victim to scams.

Here’s our five-step guide to help you to identify scammers:

1. Have you received cold calls, unsolicited emails or text messages? If it sounds too good to be true, it probably is. Do not transfer your pension, unless you are absolutely certain your money will be safe. Once you transfer, it could be too late.

2. Have you received professional advice? Was your adviser regulated and qualified? Be wary of pushy, unregulated advisers. You can check if someone is regulated via the FCA register. 

3. Are you being pressured to carry out a transfer 'as quickly as possible'? Never be rushed into making a decision. Scammers might suggest moving the pension overseas with the promise of high returns and tax benefits.

4. Have you received documentation from a new pension provider? Ask your current pension provider to check the HMRC's registration status of the scheme you are thinking of transferring into. All schemes must exercise due diligence when transferring a pension.

5. Were you told you can access the pension before the age of 55? Do you understand the tax implications? Under normal circumstances you cannot access your pension before the age of 55. If you do, this will create significant tax liabilities from HMRC.

If you have fallen victim to a scam, there are few things you can do:

1. Contact the Action Fraud line on 0300 123 2040.
2. Make a complaint to the Pension Ombudsman.
3. Get in touch with the Financial Ombudsman about the advice you received and check if the adviser was regulated by the Financial Conduct Authority.
4. Make a complaint to your previous pensions provider if you feel they did not undertake proper due diligence when they transferred your pension.