Beware of pension scams and watch for the warning signs

Anyone can be the victim of a pension scam, no matter how financially savvy you believe you are.  Scammers will often try to persuade pension savers to transfer their entire pension pot, or to release funds from it, by making attractive-sounding promises.  The pension money is often invested in unusual, high risk investments such as overseas property and hotels, renewable energy bonds, forestry, parking and/or storage units. 

This year alone more than £2m has been lost to pension scams and average losses stand at just over £50,000 which is double the figure recorded for 2020.

Cold calling about pensions is illegal and a likely sign of a scam. Cold calling used to be the most common method of approach but since this was banned in 2019, tactics have moved to sophisticated online approaches such as even making contact through social media.

Common tactics and signs of pension scams are:

  • phrases like ‘pension liberation’, ‘loan’, ‘loophole’, ‘savings advance’, ‘one-off investment’, ‘cashback’, ‘free pension review’.
  • guarantees they can get you a better return on your pension savings.
  • help to release cash from a pension before the age of 55, with no mention of the HMRC tax bill.
  • high pressure sales tactics such as time limited offers to get the best deal; often using couriers to send documents, who then wait until they are signed.
  • unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections.
  • complicated investment structures.
  • long-term pension investments which sadly often mean people who transfer do not realise something is wrong for several years.

The Importance of Approved Financial Advisers

The FCA (Financial Conduct Authority) regulates firms and individuals that provide financial advice.  Pension scammers sometimes pose as financial advisers. They may have smart-looking brochures and websites even giving scam warnings, pretending to be official or government-backed but professional appearances do not guarantee that a company can be trusted. You should always check with the FCA to make sure a firm is authorised before acting on any pensions advice given.

Iceni Financial Advisers are approved by the FCA.  For help with your retirement plans please contact us today and you can be assured that the advice we provide is regulated and trusted.