Pension Scams – How to spot them

People aged 55 and over are receiving phone calls, letters and texts from people wanting to “help” them access their pensions. How can you tell a bona fide adviser from a fraudster? Here are some tips which should help you spot the difference.

Scammers generally try to lure you with promises of one-off investments, pension loans or upfront cash. Once you have signed any forms and the transfer has gone through it’s too late. You could lose all your savings and on top of that be landed with a hefty tax bill to pay.

Common tactics used by scammers

  • A cold call, text message or website pop-up or someone knocking on your door and offering you a free pension review, a one-off investment opportunity, or talking about a legal loophole.
  • Promises of returns of over 8% on your investment – if it sounds too good to be true it probably is.
  • Paperwork delivered to your door by courier that requires immediate signature. Never be pressured into signing anything.
  • An offer that gives you access to your pension before you turn 55 by transferring funds overseas.
  • A proposal that puts all your money into a single investment. Most financial advisers recommend a range of investments to spread the risk.

Don’t become a victim of pension fraud

Do not be pressurised or rushed into signing anything until you are certain. A genuine financial adviser will never rush you into a decision.

If you are consulting a financial adviser, which is a sensible thing to do, make sure that they are registered with the Financial Conduct Authority at www.fca.org.uk/register.

If you’ve already signed papers and suspect a scam, report it to Action Fraud at www.actionfraud.police.uk or call
0300 123 2040.

Read the FCA’s Scamsmart warning list at www.fca.org.uk/scamsmart. This lists the names of investment schemes that are known scams. Further information is available from The Pensions Advisory Service.

If you are approaching 55 or about to retire, Pension Wise can tell you more about what you can do with your retirement pot, www.pensionwise.gov.uk. However, what Pension Wise won’t do is give you advice specific to you, your circumstances and objectives. For that you need to talk to a professional financial adviser.

When can you legally access your pension pot?

You can release funds from your pension as soon as you reach the age of 55. If you’re under 55 you cannot access your pension unless you are certified as being too ill to work. When you do access your pension you could have tax to pay, depending on how much you take and any other income you have. Professional financial advisers can help ensure you don’t pay tax needlessly.