Pension scams

What is a pension scam?

Pension savings can be an attractive target for fraud because many people do not engage with them until later life and it can be many years before someone realises that they have been scammed. If someone loses their pension to a pension scam, there is no guarantee of the savings being returned and there may be little or no opportunity to rebuild pension savings.

Pension scams can range from criminal offences and regulatory breaches to legal but unethical behaviour. Scammers may aim to make money through fees, direct access to pension savings or by receiving investments. Common features of pension scams include attempts to gather information for future scams, false or unrealistic promises, and acting without the consent of a pension saver.

Pension scams support

Spotting pension scams

Pension scams can be difficult to spot, and many people are overconfident in their ability to spot a scam. MoneyHelper, a free service sponsored by the Department for Work and Pensions, provides guidance on spotting pension scams.

The Financial Conduct Authority, the UK’s financial services conduct regulator, provides resources to help determine whether or not something may be a scam:

• The Financial Conduct Authority register is a list of firms and individuals and the permissions they have to carry out regulated financial services activities.
• The Financial Conduct Authority also publishes a warning list. The warning list can be used to check if a firm or individual is known by the Financial Conduct Authority to be operating without permission or running scams.
• ScamSmart is a campaign to increase awareness of the tactics used by scammers to help potential victims spot fraud attempts. The website provides information to help individuals protect themselves from scams.

Reporting pension scams

Scams should be reported to the pension provider, the Financial Conduct Authority, and Action Fraud, the UK’s national reporting centre for fraud. Requests to access an expert reporting tool for making multiple reports can also be made by emailing the City of London Police.

Support for pension scam victims

Action Fraud publishes resources that can support people who have been a victim of a scam. It also publishes a list of organisations that offer support.

Preventing pension scams

The prevalence of the different types of pension scams has changed over time. Following reforms to pension scheme registrations in 2004 there were concerns about pension liberation. More recent concerns have focused on scammers exploiting the greater freedom to access pension savings introduced by the pension freedoms.

Government action to prevent pension scams has included:

• enabling HM Revenue & Customs (HMRC) to refuse to register a pension scheme, or de-register an existing scheme, if the scheme administration was not “fit and proper”.
• a ban on cold calling in relation to pensions, including emails and text messages.
• establishing a multi-agency group to tackle pension scams, now known as The Pension Scams Action Group.
• placing restrictions on transfers of pensions overseas, transfers that might not be in the savers best interest and transfers where there are signs of a pension scam.