Pension scams are a real scourge in the UK. Figures from Scottish Widows show that 13% of UK adults have been targeted by a pension scam, with 5% saying that it was successful.

According to estimates from the Pension Scams Industry Group (PSIG) reported in Money Marketing, around 40,000 people lost roughly £10 billion to fraudsters between 2015 and 2021.

Understandably, regulators and scam-fighting bodies want to protect UK savers from this danger. Many of these organisations have recently issued scam warnings, including:

  • The Pensions Regulator (TPR)
  • Financial Conduct Authority (FCA)
  • Money and Pensions Service (MaPS)

Your pension is a highly effective way to save your money. The combination of the tax relief on offer alongside the potential for investment returns that your funds can generate make them a tax-efficient way for you to set money aside for the future.

However, this also makes your fund one of the most valuable single assets you own. As a result, it is no surprise that scammers are so keen to dupe you into giving them access to your savings.

This makes it paramount to keep your funds safe. So, find out why pension scam-fighting bodies are concerned, how to spot a scam, and why working with a financial planner can give you confidence that your future savings are well protected.

The cost of living crisis has triggered warnings from various members of the Pension Scams Action Group

The reason that pension scams have come to the forefront for scam-fighting bodies is the cost of living crisis currently affecting the UK. Many institutions now share concerns that savers may be at potential increased risk from scammers seeking to cash in on the economic uncertainty.

The FCA, MaPS, and TPR have all issued warnings over fears that the recent headlines of squeezed household finances may leave savers more vulnerable to scammers than usual.

The three bodies are all members of the Pension Scams Action Group, a multi-agency taskforce dedicated to protecting savers from scams.

Over the past month or so, the organisations have become concerned that fears over the economy, such as recent extreme movements in gilt yields, may prompt savers to incorrectly decide there is a risk to their retirement pots, leading them to make rushed decisions about their finances.

While the three organisations had not yet seen evidence of an increase in pension scams, they explained they wanted to act now given concerns over cost of living increases and interest rate rises, which may make savers more likely to look for ways to shore up their finances. This may potentially leave them exposed to crooks set on exploiting their fears.

How to spot a potential scam

With the potential increased risk of scams over the coming months, it may be sensible and prudent to familiarise yourself with these common signs of pension scams.

Being contacted out of the blue

A tell-tale sign of a pension scam is being contacted out of the blue by someone you do not know.

In fact, in 2019 the government actually made it illegal to make pension cold-calls. So, if you are contacted out the blue by a so-called adviser that you are not expecting to hear from, it is likely that it is not a legitimate enquiry.

Poor grammar and the use of certain language

You can often recognise scams from grammar, spelling, and the use of certain language.

Look out for poor grammar and spelling mistakes in emails, especially in email addresses and web addresses. Scammers often add additional punctuation to a fake website to make it look legitimate.

Scammers also often use stock language and phrases to make their offer as appealing as possible. Such phrases to keep an eye out for that might indicate a scam include:

  • Pension liberation
  • Loan loophole
  • Savings advance
  • One-off investment
  • Cashback

Be wary if a so-called expert or adviser uses language like this.

Guarantees of better returns

One of the main techniques that scammers use is to say that their pension scheme offers guaranteed better returns than your current plan. If someone says this to you, it is almost certainly fraudulent.

While you can design a careful, logical investment plan, no one can guarantee investment returns as they simply cannot know what will happen to the markets in the future.

Remember: if it sounds too good to be true, it probably is.

Help to release cash from a pension early

Other than in exceptional circumstances, you are typically not able to access any of your pension funds before the age of 55 (rising to 57 in 2028) without incurring a tax bill.

If someone says they can help you to release funds from your pension early with no mention of the HMRC tax bill that can arise, this is highly likely to be a fraudulent offer.

High-pressure sales tactics

Scammers often create an artificial time pressure to force you into acting rashly, perhaps saying that an offer is time-limited for you to get the best deal. They may even use couriers to send documents, who wait until they are signed, pressuring you into making a decision before you have had a chance to think.

This technique, known as “push-payment fraud”, almost certainly indicates a scam. Pension providers and advisers will never pressure you into making a decision like this, and there should not be a time limit for you to do so.

Unusual, high-risk investments

Scammers often say that they have access to unusual, high-risk investments with the promise of greater returns or tax advantages.

If these investments are real (which they are often not), they tend to be overseas, unregulated, and offer no consumer protections, putting your money at risk.

No matter how tempting this may sound, it is often best to steer clear.

Complicated investment structures

To hide the true nature of the fraud, scammers often describe complicated investment structures that are difficult or even impossible to make sense of.

If the investment structure is complex and you do not understand it, there is a high possibility that it is fraudulent.

Fixed-term pension investments

Fraudsters may look to sign you up to a fixed-term pension investment, meaning those who transfer in do not realise something is wrong for several years.

While investing for the long term is often beneficial, legitimate advisers are highly unlikely to ask you to commit to a fixed-term investment like this.

Secondary scamming

If you know that you have fallen victim to a scam, you should also be on guard against “secondary scams”. Fraudsters often reapproach people who have already been scammed and offer to help them get their money back in return for a fee.

Stay vigilant even if you have already been scammed, as fraudsters may attempt to scam you again.

Working with a financial planner means your future savings are protected

With all this in mind, it underlines the importance of working with a financial planner who you can trust.

By having a planner in your corner, you can be confident that an experienced professional is looking after your money, building a bespoke financial plan for you with your life goals at its centre.

Above all else, your financial planner should be fully authorised and regulated by the FCA. That way, you will have the reassurance that your planner and their firm will work exclusively in your best interests. You can search the Financial Services Register to check that your planner has permissions from the FCA.

Whether you are at the start of your career or approaching retirement, working with a financial planner can offer you immense peace of mind that your wealth is safe and on track to help you reach your life goals.

Speak to us

At DBL Asset Management, we will help you plan your finances so that you can live the lifestyle you want in later life.

If you would like to find out what we can do for you, please get in touch. Email or call 01625 529 499 today.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.

Workplace pensions are regulated by The Pension Regulator.