13 Ways To Protect Yourself Against A Pension Scam

pension scams

This page was last updated on 1 July 2022

13 Ways To Protect Yourself Against A Pension Scam In 2022

Pension scams often involve fraud and being offered pension options that seem too good to be true. A pension scam (even though it appears to be a pension opportunity) can make a serious dent in your pension pot and you could lose a lot of money.

Topics that you will find covered on this page

You can listen to an audio recording of this page below.

This article will offer you some advice on how to avoid pension scams and also some advice to protect your savings.

It includes:

  • The meaning of a pension scam
  • Information about how pension scams work
  • Advice on how to spot a pension scam 
  • Advice on how to avoid pension scams and protect your pension savings
  • Advice about which helplines to contact for support 

What are pension scams?

In April 2015 the government changed the rules concerning pension savings. From that time onwards, you were granted access to your pension before the age of 55 with withdrawals taxed at marginal income rates rather than the former rate of 55%.

Unfortunately, scammers are aware of this and try to take advantage of these new pension freedoms by attracting you with scams that promise upfront cash and offer once in a lifetime ‘deals’. 

They might persuade you to cash in your pension and give them some or all of the amount for investment purposes.

It is actually quite difficult to detect scams: some pensions scammers have put together very convincing websites and even a google search can display results which make them look like a legitimate company. However, aside from reading the advice below, you can check with the Financial Conduct Authority (FCA) to verify that they are a registered company and avoid a scam.

Here is a useful video discussing how to spot a scam.

How pension scams work

Scammers might ask you to cash in your pension pot – either the whole pension or a large portion of it – and give them the money so you can benefit from an investment opportunity.

Can someone steal my pension?

It is certainly possible for someone to steal your pension. According to the Pensions Regulator, pension scam victims lose an average of over £90,000.

If you suspect you have been the victim of fraud or if you believe someone is trying to access your pension, you should call Action Fraud (0300 123 2040). 

As an alternative to calling 0300 123 2040, you can call the Pensions Advisory Service telephone line: 0800 011 3797.  The line is open Monday to Friday from 9am to 5pm. 

spot a pension scam

How to spot a pension scam

1- Watch out for warning signs

There are a few signs that suggest you may be a target of a pension pot scam:

  • When the firm does not allow you to call them back.
  • If the communication (text message, phone conversation, email) pressures you into making a decision e.g. to share documents relating to your pension or to transfer your pension (either some or all of your pension pot).
  • During the phone call, the caller might offer to facilitate access to your pension before the age of 55, otherwise known as the liberation of your pension. Conveniently, the company will not mention government rules regarding this process, such as the fact that it is only available under certain circumstances e.g. poor health.
  • Listen out for red flags like ‘tax loophole’ or an opportunity for a free pension review.
  • When you ask for more information, the caller may be vague about the payment structure they are proposing. They may be unable to provide information about where your money will be invested. They may refer to investments abroad but these developments often do not exist!

2 – Watch out for people contacting you out of the blue and pension cold calling

You should be suspicious when people call or message you out of the blue regarding making a decision about your pension: they are likely to be pensions scammers. You should equally be suspicious of adverts that claim to offer a free pension review or a no-strings-attached consultation.

A cold call about pensions is almost certainly the work of scammers trying to get their hands on your savings. In January 2019, the government introduced a cold calling ban regarding pensions. 

As a result of the government’s decision, you should not be contacted by anyone about your pension, either by phone or text, unless you have previously given them permission.

"Pension scams often involve fraud and being offered pension options that seem too good to be true. A pension scam (even though it appears to be a pension opportunity) can make a serious dent in your pension pot and you could lose a lot of money. "

3 – Make use of the resources available to you

If you are worried that you have been swindled or feel that you are at high risk of being targeted by pension scams, you should get in touch with the Pensions Advisory Service. If you begin to grow concerned over the weekend when their helpline is closed, you can also consult the Pensions Advisory Service website.

4 – Commit to making pension-related decisions with other people

The people behind a scam will try to pressure you into making a rushed decision with offers that are too good to be true. When it comes to handling your pension savings, you should commit to making decisions slowly, making use of all the information available to you.

A good way of protecting yourself against fraud is by talking through any decisions related to your pension savings with a trusted friend or family member. 

If you require professional help, you should only use a financial advice firm or financial adviser that is authorised by the Financial Conduct Authority (FCA). The easiest way of getting some peace of mind is to choose a financial adviser that is registered on the Money Advice Service Retirement Adviser Directory.

Avoid pension scams

5 – Be suspicious of a lack of professionalism

If you find that a company only has a mobile number and a PO Box address as contact details, alarm bells should be ringing: you are at high risk of a scam. You should report the scam attempt (the FCA says ‘please tell us about any scams’.)

6 – Don’t trust so-called ‘savers’

You will find that the perpetrators of a fraud will take advantage of your desire to maximise your pension savings by presenting themselves as savers. These savers will say that they know of tax loopholes

Savers will also offer high rates of return on your investment while also claiming that it is a low risk one off investment.

7 – Be wary of offers to transfer your pension abroad

You should be suspicious of anybody who contacts you trying to persuade you to transfer money overseas. Once you have decided to transfer your money into a foreign account, it becomes much harder to track and find. 

Overseas pension schemes are becoming increasingly targeted by pension scammers who target those who wish to move abroad following retirement, so you should be especially careful if this applies to you. 

8 – Take advantage of government services

Of the financial services available to you, Pension Wise is an excellent option. Pension Wise offers free and impartial advice and it is a government agency.

You don’t need to wait until you are at a high risk of a scam to ask for information about a pension provider or advice about whether you should transfer your pension.

9 – Bookmark the Pensions Regulator Website

This is a helpful resource to find out more about spotting and avoiding scams. The explanations on the website are clear and easy to read and you only need connection to the internet to access a wealth of information.

10 – Resist talk about a pension liberation

If you take money out of your pension before reaching your fifty fifth birthday through pension liberation, you may be liable to receive tax charges on more than one half of the sum you withdraw, in addition to charges incurred from entering an arrangement to liberate your pension.

11 – Check if you the Pension Wise guidance scheme applies to you

If you are aged 50 or over, you could be eligible to receive advice from the Pension Wise guidance scheme. This pension scheme is an option which is available on their website. 

The resource could be very useful to you. The resource could provide vital advice depending on your situation, which could save you thousands of pounds of your savings if you are the target of a scam.

12 – Double check a company’s legitimacy with the FCA

Do not let all your hard-earned money for retirement be taken away from you! If you are contacted by a suspicious company or one that you have never heard of, you can check with the Financial Conduct Authority (FCA) to verify that they are a registered company and avoid a scam.  

13 – Be wary of direct calls from your provider

If you ever get a phone call from a caller claiming to be your pension provider and that they have changed their bank account details and require payment into a new account, this is almost certainly the work of scammers..

A person’s pension providers will never tell them about this sort of issue over the phone, nor will they ever demand payment over the phone.

Also, it might be a good idea to think about whether you ever even shared your phone number with your pension providers or gave them permission to contact you in this way.

Article author

James Lloyd

I am the primary writer and author for Help and Advice, having originally helped start the site because I recognised that there was a need for easy to read, free and comprehensive information on the web. I have been able to use my background in finance and digital marketing to produce a number of articles for the site, which I hope are easy to read.

Outside of work I am a keen rugby player and used to play up to a semi-professional level before the years of injury finally took their toll.  Now you are more likely to see me in the clubhouse enjoying the game.

Email – james@helpandadvice.co.uk

Linked in – Connect with me

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