Thomas Coughlan, Financial Planning

Unfortunately pension scams are on the increase in the UK and are a threat to your retirement savings. If you are taken in by a scam you could lose your entire pension fund, which would be very difficult to get back.

Usually, a pension scam begins with an unexpected phone call, email or text from someone claiming to represent a financial services firm or Government body. The tactics used are becoming increasingly sophisticated, but there are a few simple signs that will help you to spot a scam and avoid being ripped off:

What to look out for


You are contacted out of the blue

If you receive unsolicited cold calls, texts and emails from an individual or firm about your pension they are unlikely to be legitimate. You should be aware of anyone who claims to work for a Government body, such as Pension Wise or The Money Advice Service, and contacts you to discuss your pension planning or offer a pension review, as it could be part of a scam

When discussing your pension ensure you speak to your pension provider, a regulated financial adviser or a Government body using the contact details on their website. You can find regulated financial advisers on the Financial Conduct Authority (FCA)  website and through unbiased.co.uk. For the latest guidance on your pension you can visit www.pensionwise.gov.uk or www.moneyadviceservice.co.uk.


You receive an offer that’s too good to be true

Schemes that offer exceptionally high rates of returns are usually very high-risk, and fully guaranteed returns are rare. Such offers should be treated with caution.

You should also be wary and suspicious about language such as ‘pension liberation’, ‘loophole’, ‘free pension review’ ‘limited time offer’ or ‘one-off investment’ as they can be the lead in to a potential scam. These types of opportunities are unlikely to be genuine.


Offering access to your pension before the age of 55

Only in very specific circumstances will you be able to access your pension before the age of 55. Participating in a scheme that provides access to your pension before then will result in severe tax penalties and the potential loss of your funds, and should be avoided.

An individual or firm promoting such a scheme may be trying to scam you.


You are expected to invest in an unusual asset

Pensions are usually linked to funds that invest in shares, fixed interest securities and cash. The assets you are ultimately invested in should be familiar and easy to locate information about e.g. Lloyds Banking Group shares, which are listed on the London Stock Exchange.

Although, it is possible to invest in more specialised assets such as commercial property through a ‘self-invested’ style pension, this is not a requirement to grow your pension pot. If you are told you must invest in an unusual asset – perhaps an offshore hotel development – to take advantage of a pension opportunity, you may be being scammed.


You’re asked to withdraw money first

Be aware if you are asked to withdraw money from your pension for an investment opportunity. The money contributed towards your pension is already invested in a range of funds or investments that your pension provider makes available. This ensures your returns are tax-free and well protected. You should never have to withdraw funds from your pension to invest them; they are invested by the pension scheme in the funds that you select. Furthermore, withdrawing money from your pension early could result in increased tax penalties.

Anyone who says you must withdraw funds from your pension to invest with them may be trying to scam you.


You are told to act quickly for the best deal

Decisions about your retirement fund should not be rushed and any offers of immediate investment for a one-time offer can be risky. You should take your time and obtain suitable advice and guidance about managing your pension properly. If you are contacted about an opportunity, research the scheme and its promoters thoroughly. If you are being pressured to reach a decision before the offer closes that could indicate that it is a scam.

How to avoid being scammed

Following a few simple steps can help you check that a pension opportunity is genuine. You should not rely on the person contacting you to provide answers to the questions you have; instead you should carry out the following research yourself:

  1. Carry out an internet search on the person, their firm and the pension opportunity they are promoting. If you cannot easily locate details or it/they look dubious, it is potentially a pension scam.

  2. Contact your pension provider or Government regulated bodies such as Pension Wise, the Pensions Advisory Service or the Money Advice Service for pension guidance in the first instance. Our Retirement Explained site can also help answer any pension questions you may have.
  3. Check you are speaking to a regulated financial adviser, firm or pension provider. The Financial Conduct Authority register enables you to do this. You can also call the Financial Conduct Authority on 0800 111 6768. If you can’t find any details about the people who have contacted you it is likely to be a scam.

    The FCA website is simple to navigate here is how you would search for Scottish Widows, for example:

    Screenshot of the FCA search form. The text 'Scottish Widows' is in the search field

    Screenshot of the FCA search results. 'Scottish Widows Limited' is highlighted.

  4. If a caller claims to work for a company that appears on the FCA Register, carry out an independent search for their phone number and contact them to ask if they employ the individual concerned.
  5. Do not proceed with any transaction that you have doubts about. You can contact the Pensions Advisory Service on 0300 123 1047 for advice. If you expect that you have been the victim of a scam you should contact the Action  Fraud team on 0300 123 2040.

Our Pension Basics in 30 seconds film also runs through how to spot a Pension Scam: