How to avoid a pension scam?

Ricky Banham
Financial Planning
Ricky Banham, Lovewell Blake Financial Planning

In recent weeks’, we have seen an upward trend in media activity regarding pension scams in the UK. Fraudsters are using sophisticated ways to deceive savers to part with their retirement savings using various means of communication.

Ricky Banham, Lovewell Blake Financial Planning

This, coupled with advancement in digital communication is a serious threat to your savings. These kinds of scams are becoming more common, and harder to identify. A lifetime of savings could be lost in moments.

What is a pension scam?

Essentially, a pension scam is when someone tries to defraud you of your retirement savings. This unwelcome deception often begins by someone contacting you unexpectedly through either a phone-call, an email, or a text message. The person contacting you may appear genuine on the phone-call, but beneath their charade is an attack on your retirement savings. 

In this article, we will highlight the common scams, and how you can be alert to protect your retirement fund. 

How you can identify a scam?

Since January 2019, there has been a ban on cold calling in respect of pensions. You should not be contacted by an individual, or company to ask about your pension - unless you have specifically asked them to do so. Here are a few warnings on how scammers could target your retirement savings:

  • You could be forced to make a quick decision, and pressurised into doing so, or you are encouraged to transfer/relinquish your savings by completing forms sent by email, or by courier. Transferring a pension is a well-considered process with the expertise of a financial adviser regularly sought
  • Contact details of the perpetrators are vague, or non-existent
  • Claims that you could access your pension before age 55 – often referred to as ‘pension liberation’, or ‘pension loans’. Only in the event of serious ill-health, or a condition of the pension scheme rules permit accessing benefits prior to age 55
  • Offer you tax ‘loopholes’ that are completely false
  • Promising high rates of return on your pension investment with a cautious approach to risk
  • Be aware of copy-cat websites that look official, or government backed
  • Persuade you to transfer, or release funds from your pension to invest in overseas property and hotels, car-parks, and storage units

You could lose all your money, and face further anguish in the form of a tax charge from HM Revenue and Customs (HMRC) if you withdraw your pension savings before the age of 55.

Be aware: victims of pension scams lose an average of £91,000, say the FCA and The Pensions Regulator.

How to protect yourself from investment scams

To avoid being a victim of a pensions scam, please ensure you follow these simple rules:

  • Reject any unsolicited calls, emails, text messages or visitors to your door. Legitimate companies will not cold call or contact you randomly
  • Utilise the FCA register for firms and individuals to ensure they are suitably authorised. There is a separate register for ‘unauthorised’ firms too
  • Consult friends and family in the event of any uncertainty.

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