How to protect yourself from pension scams

03 May 2016

Last updated: 8th November 2024

After years of working hard to save for retirement, making sure that you are safe from pension scams can ensure that your financial future is better protected.

The consequences of falling victim to a pension scam can be devastating. But when armed with knowledge of how to identify the warning signs of a scam and who to trust with your money, you can ensure that the only people who deal with your pension fund are those qualified to do so.

On this page:

• What is a pension scam?

• What is a secondary scam?

• An ongoing problem

• Work to raise public awareness of pension scams

• How to tell if someone is trying to scam you

• How to protect yourself from a pension scam 

• How to report a suspected pension scam

• How do I know if Retirement Line is a reputable company?

• Talk to Retirement Line about your annuity options 

What is a pension scam?

A pension scam is when someone tries to con you out of the money you have saved or invested for your retirement years. It will often start by someone contacting you unexpectedly about:

• accessing your pension money before you have reached 55

• an investment or other business opportunity

• how you can invest your pension money

The investment opportunities they discuss with you may sound very convincing and even appealing, but if someone contacts you out of the blue about any of the above then it is likely to be a scam.

Their aim is very simple: to get you to cash in your pension pot and transfer the money. By the time you have transferred your money and realised that something untoward has taken place, it will already be too late.

A scam could cheat you out of all your pension savings and in some cases make you liable to pay tax you would otherwise have avoided,  or face huge additional fees.

What is a secondary scam?

A secondary scam is where fraudsters target people who have already lost money due to a pension scam. The fraudsters approach people who have been the victim of a scam and offer to help them get their money back. But in reality, they are looking to further scam the individual, such as by asking for an upfront fee.  

An ongoing problem

The issue of pension scams has unfortunately been ongoing since the introduction of pension freedoms in 2015.  

In 2016, research by Citizens Advice found that common pension scam warning signs were missed by nearly 90% of people in an experiment where they were shown mock advice adverts.

Action Fraud said that reports of pension scams fell from 1,788 in 2014 to 358 in 2020. However, they noted a 45% increase in scam reports in the first three months of 2021.

In the same year, the FCA reported that UK pensions fraudsters had stolen £2.4 million in a period of less than six months, but also noted that many scams go unreported. 

Work to raise public awareness of pension scams

The authorities have been working to make the public more aware of the risk of pension scams, including these campaigns:

The Pension Scams Industry Group was set up in 2014 as a voluntary industry body to combat pension scams. It published a Code of Good Practice for pension schemes to follow.

In 2021, Action Fraud launched a national awareness campaign about the importance of doing research before changing your pension arrangements.

In 2022, the FCA launched its ongoing ScamSmart campaign aimed at giving consumers the knowledge and tools to avoid pension and investment scams. Educational resources from ScamSmart are used by a number of pension schemes when communicating with their members.

The Pensions Regulator has an ongoing campaign in which pension schemes are asked to pledge to combat scams by regularly warning members about the issue. Schemes also pledge to follow best practice for identifying potential scams when handling requests from members to transfer savings away from the scheme.

How to tell if someone is trying to scam you

There are some straightforward warning signs to look out for that could help you identify if you are being approached by a fraudster. Be wary if an individual or company:

• Contacts you unexpectedly to discuss an investment opportunity, particularly something that you need to be quick to ‘take advantage’ of

• Suggests that you can access your pension money before 55 and that they can help you do this

• Encourages you to take out a large lump sum from your pension savings, or even your entire pension pot in one go, and to let them invest it for you

• Says words and phrases like ‘pension liberation’, ‘free advice’, ‘loan’, ‘loophole’, or ‘one-off investment’

• Offers you an investment described as ‘unique’, ‘overseas’, ‘environmentally friendly’, ‘ethical’ or in a ‘new’ industry

How to protect yourself

Fraudsters will often try to rush you into a decision, offering you a limited and ‘very attractive’ investment opportunity. The first way to protect yourself is to never make a rushed decision about your money. A trusted specialist will not pressure you into deciding anything about your pension savings quickly.

We also highly recommend that you only discuss your pension arrangements with a firm which is authorised by the Financial Conduct Authority (FCA). You can check on a company’s status on the Financial Services Register at  www.fca.org.uk/register/.(Retirement Line’s registered number is 726601.)

To be certain that when you call a company you really are calling them and not an imposter, use the company’s phone number as listed on the Financial Services Register.

How to report a suspected pension scam

You can report a suspected pension scam to a number of people:

Your pension provider. If you are a member of a pension scheme and suspect someone of fraudulently trying to get you to hand them your pension savings, or another form of fraud, please let your pension scheme know. 

The FCA. The Financial Conduct Authority can be reached on 0800 111 6768, or you can use their reporting form.

Action Fraud. Access the Police’s fraud reporting service at actionfraud.police.uk or call 0300 123 2040. 

Police Scotland. In Scotland, instead of Action Fraud, you can report a suspected fraud or cybercrime to the police by calling 101.

How do I know if Retirement Line is a reputable company?

We encourage you to verify our status as a company authorised by the Financial Conduct Authority (FCA). You can find our record under our registered number 726601 on the FCA’s Financial Services Register at www.fca.org.uk/register/. 

Retirement Line is in fact the UK's largest annuity broker* and we are very active in the industry. Our Director of Propositions and Corporate Partnerships Mark Ormston in particular is involved in a number of industry bodies.

We have also been featured or quoted in numerous newspapers, magazines and news websites, including iNews, Professional Pensions, This is Money and FT Adviser.

You can also find over 3,000 reviews of our service dating back more than a decade at Trustpilot. The ‘Excellent’ five-star rating we’ve achieved speaks volumes about the thousands of people who have secured their annuity income through our service.

Talk to Retirement Line about your annuity options 

If you are considering an annuity for retirement income, our friendly specialists are here to help. They will explain your options and explore how much guaranteed income you could achieve from your pension fund.

Retirement Line will not handle your money, or offer to handle your money, at any point when arranging your retirement income. Instead, once we have found you the highest retirement income, we organise the transfer of your pension savings from your current pension provider directly to your chosen annuity provider.

You can speak to our team today by calling freephone 0800 652 1316 or request a call back. Alternatively, use our annuity calculator for an instant estimate of how much annuity income you might expect to achieve.

Sources:

90% of people missed pension scam warning signs: Too good to be true? Understanding consumer experience of pension scams a year on from pension freedoms. Citizens Advice. Accessed 23/07/2024

Reports of pension scams 2014 to 2020: Protect your pension. Action Fraud. Accessed 23/07/2024

UK pensions fraudsters had stolen £2.4 million in a period of less than six months: Scammers target over £2 million in pension pots in the last five months. Financial Conduct Authority. Accessed 23/07/2024