How To Avoid Pension Scams In 2017

What Are Pension Scams?

The government’s pensions reforms in April 2015 have granted the over 55’s opportunity to cash in their personal and company pensions.

Pension scams have always been around, but now thousands of people have the choice over what happens with their pension pot, scammers are constantly trying to think of new and devious ways to take advantage and to get their hands on the millions of pounds now accessible.

Scammers may try to cloak their devious ways by referring to their scam in seemingly innocent terms eg:

• cashing in your pension
• pension loans
• pension selling
• early pension release
• pension liberation

However if their service involves transferring your pension savings to a scheme that gives you access to your funds before you are 55 or allows you access to your pension as a large cash sum (which may be more than currently legal), you’re being targeted by pension scammers.

(Note: If you are seriously ill or have a ‘protected pension age’, you may be able to take money from your pension pot before age 55. Check with your pension provider for confirmation. However, for the vast majority of us, we aren’t legally able to access funds before the age of 55.)

Sounds Too Good To Be True? It Probably Is!

If someone is selling you what seems a too-good-to-be-true investment, then it probably is and you’d be wise to listen to your gut instinct. Attempts to sell these ‘investments’ are usually made by a phone call, email, text message – or even in person by knocking at your door.

Bear in mind that a legitimate pension or investment firm will never call you to advise releasing cash from your pension, neither will they advise to access it before you are 55 or to make extra tax savings, so do be concerned if you do get a call.

So How Do They Do It?

• Some scammers can seem convincing in that they’re offering a legitimate and beneficial service. Some run sophisticated and successful operations which enable them to con millions of pounds from savers.
• Scammers may even try to lure you with an upfront cash payment before you ‘invest’ or ‘liberate’ your pension. However, be aware that before you are 55, ‘liberating’ your pension is not allowed under the new rules and some scammers advise that it is permitted in certain schemes. Don’t listen to them!
• They’ll often say they provide a ‘free pension review’ to make you think that they’re genuine and professional independent advisers.

Note that if you would like a review of your pension, you need to check that the Financial Adviser is registered with the Financial Conduct Authority (FCA).

How Can I Protect Myself?

• Be vigilant – if anyone cold calls you to offer a deal to make large sums of money, view with suspicion – and do not give any personal details over the call.
• Ask for a number to call this person back. Scammers will probably be unwilling to give contact details.
• Only contact a regulated Financial Adviser who is registered by the Financial Conduct Authority should you want to review your pension.
• Beware that some scammers might pretend to offer free and impartial advice, and some might say they represent the Government guidance Pension Wise, which is an offence to do so.

How Do I Know If It’s A Scam?

• You’re contacted without any prior notification over the telephone, via text message or at your door
• Phrases used by the scammer include ‘government endorsement’, ‘free pension review’, ‘legal loophole’, ‘one-off investment opportunity’, ‘cash bonus’
• You’re requested to transfer your money abroad
• You’re promised access to your pension pot before the age of 55
• There’s no copies of documentation
• You’re urged to accelerate the transfer of your money to the scheme.

What Else Should I Know?

1. If they do give you their name or company name, always check the FCA’s register of regulated financial services providers. It may be that they are registered – but that it may be that they’re being investigated.
2. The Government does not endorse any one company. If they tell you that they’re government-endorsed, they’re not genuine.
3. The moment you’ve transferred your money into a scam, it has gone. All your pension money could be lost and you may face a huge tax bill on top. Don’t go ahead with any scheme unless you are absolutely confident in it.
4. If you have questions about your pension options, you can book a free appointment with the government’s Pension Wise guidance service, which is delivered by the Pensions Advisory Service and Citizens Advice.

Further Help

• If you’ve been approached, and you’re unsure about the scheme, call the Pensions Advisory Service on 0300 123 1047 for guidance
• To learn more about the pension changes that came into force in April 2015, take a look at this helpful BBC article.

I Have Been Targeted. What Do I Do?

If you think you’ve been targeted by scammers, call Action Fraud immediately on 0300 123 2040 or use their online reporting tool.