Pension Scams

What is a pension scam?

There are different types of pension scam, but they can all lead to you losing a lifetime’s worth of savings in a moment.

Since April 2015, you have more choices about how you can access your pension pot.

Scammers know this and will try to lure you with promises of upfront cash and one-off ‘deals’ with ‘guaranteed’ high returns.

Remember that pension scams can take many forms, and usually appear to be a legitimate investment opportunity. But pension scammers are clever and know all the tricks to get you to hand over your savings.

They might try to persuade you to cash in your pension – either the whole lot or a large sum – and hand the money to them to invest.

Watch out particularly:

• for people contacting you out of the blue, or
• adverts claiming to offer free pension reviews or no-obligation consultations.

How to spot a pension scam

There are some common tell-tale signs that mean it could be a scam:

• Unsolicited approaches by phone, text message, email or in person. Since January 2019, there has been a ban on cold calling about pensions. This means you should not be contacted by any company about your pension, unless you’ve asked them to contact you.
• When a firm doesn’t allow you to call them back.
• Where you’re forced to make a quick decision, are pressured into doing so, or are encouraged to transfer your pension quickly and send documents by courier or get a personal representative rushing you. Never be rushed into a decision.
• Where contact details you’re given, or on their website, are only mobile phone numbers or a PO box address.
• When they claim they can help you or a relative unlock a pension before the age of 55, sometimes known as ‘pension liberation’ or ‘pension loans’. Only in very rare cases, such as very poor health, is this possible. Read more in our guide Early retirement because of illness, sickness or disability.
• When they claim to know of tax loopholes or promise extra tax savings.
• Offer high rates of return on your investment, but claim it’s low risk. Investments can go up as well as down, so if it sounds too good to be true it probably is.
• Offers or mentions of ‘one-off investments’, ‘time-limited offers’, ‘upfront cash incentives’, ‘free pension reviews’, ‘legal loopholes’ or ‘government initiatives’.
• Claiming to be from legitimate organisations – legitimate organisations will never contact you without your permission first.
• There might be little or nothing in the way of contact names, addresses or phone numbers, but there might also be lots of people or firms involved. The more people involved, the more likely it’s not legitimate.

Taking money out of your pension early can result in tax charges of more than half the value of the money you take out.

This is on top of charges of typically 20% to 30% for agreeing to these arrangements. Your remaining pension savings will also be placed into high-risk investments.

Investing your entire pension into one single investment could be very high risk, as investments go down as well as up.

In fact, in the worst-case scenario, you could lose all of your money.

If you’re not comfortable with the level of risk being suggested, it’s important to think carefully about whether it’s right for you.

Claiming to be from government-backed organisations

Some scammers might imply that they’re part of the government-backed Pension Wise service. They do this by including ‘wise’, ‘guidance’ or ‘pension’ in their name.

A Pension Wise free appointment offers impartial and free information and guidance on your pension options. They will never contact you out of the blue to offer you a pension review and it only appears on our Pension Wise page.

If you get a call claiming to be from us, the government or another government-backed organisation, put the phone down.

When you’ve transferred your pension or handed over your pension savings, it’s too late. Many victims have lost their entire pension savings.

How to protect yourself from scams