Pension scams are offers or appealing arrangements that are used to defraud people into moving their pension funds into a fake scheme. This can cause people to lose a significant part or even all of their retirement savings. It could take years for someone to realise they have fallen victim to a pension scam.
Pension scams can take various forms, but the most common include pension liberation, pension review, pension advice scams, and pension investment. Pension liberation scams, for instance, offer individuals access to their pension fund before the age of 55. However, in most cases, people lose the rest of their pension savings and have to pay extra taxes on the money they accessed early.
Likewise, pension investment scams often promise investment returns that are not realistic by persuading individuals to transfer their money into fake investment schemes. Pension scams could also take the form of free reviews or pension advice which lead to scammers trying to convince people to move their pension into a high-risk account. Sometimes these high-risk investments are just poorly managed or a complete scam intended on getting money out of people.
Reporting a Scam
You can find help from the following authorities when reporting a pension scam:
The pension provider
Pension providers are organisations that manage and administer pension schemes. It is vital to report a suspected scam to the pension provider, as they may be able to help recover any lost funds or stop any further fraudulent activities on the pension account.
The Financial Conduct Authority
In the UK, the Financial Conduct Authority (FCA) regulates the financial services sector. It plays the role of protecting consumers, maintaining industry stability, and encouraging fair competition among providers of financial services. The FCA can be contacted about potential scams.
Action Fraud
Action Fraud is the national reporting centre in the UK for cases related to fraud and cybercrime. They should be contacted about any concerns. They share a list of organisations that offer resources and support to victims of pension scams.
Financial Ombudsman
The Financial Ombudsman can handle complaints about mis-sold pensions.
The Pension Scams Action Group
This is a group that has been recently set up by the government which comprises various organisations which work together to tackle scams collaboratively.
What Are the Signs of a Pension Scam?
Irrespective of the type of pension scam, they all share one aim, which is to take money from someone’s pension. Therefore, it is important to be aware of the warning signs so you don’t get conned. Here are some signs that you may become a victim of a pension scam:
- Cold calls and cold emails: Often, scammers defraud people through unsolicited contact. So it’s a good idea to be wary of cold calls, emails, text messages, or even visits in person about your pension. Whenever you receive a cold call about your pension, it is best to request to call them back. Legitimate companies will gladly share their contact information, while scammers are usually hesitant to provide such details. In addition, the government is banning cold calling with the purpose of selling financial products, so if you receive one, you’ll know it isn’t a legitimate company.
- Promises of high returns: Scammers often promise high returns that are too good to be true. Therefore, a pension scheme that offers unusually high returns is a warning sign. Get independent advice before proceeding.
- Pressure to act: Pension scams, like many other types of fraud, often employ the “hard sell” technique. The hard sell technique involves high-pressure tactics and a sense of urgency to compel people to make a purchase or act immediately.
- Schemes that offer early access to pension funds: Early access to pension savings before the legal retirement age usually results in significant tax penalties, so be careful about such offers.
If you have been mis-sold a Self Invested Personal Pension, you may be able to make a claim for your losses. Contact us today for further advice.
