Pension Scams

This briefing paper provides information on how to spot pension scams and aims to answer some of the frequently asked questions on which constituents ask for help with from their MPs. It does not provide legal or financial advice.

How big is the pension scam problem?

Aggregate pension savings in Great Britain were worth £4.5 trillion (in the period 2012-14), and for individuals they are often their single largest financial asset. The high value and fact people often do not have to engage with their savings until much later in life (when they can be more vulnerable to scams) makes them an attractive target for fraudsters.

How can you spot a pension scam?

It is not always easy to spot a scam as there are an array of different and often sophisticated techniques being used to part savers from their money. In 2017, pension scam victims were reported to have lost an average of £91,000. Further, only a minority of pension scams are believed to ever get reported.

Citizens Advice has identified four ‘types’ of pension scam to look out for:

• Liberation scams that offer access to a pension before the age of 55. This often results in a large tax bill in addition to the loss of savings.
• Investment scams that offer high (unrealistic) returns on overseas investments of pensions.
• ‘Review’ scams that offer a ‘free’ review into pension savings and investment returns.
• ‘Advice scams’ that offer free advice with the aims of obtaining information or authority to transfer a pension or to act as a lead for other pensions scams.

Where can I get pensions advice?

You can check the Financial Conduct Authority (FCA) register of regulated and approved advisers here. If you use an adviser that is not approved by the FCA, you will not have access to the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong .Further, the FCA lists several public bodies that can help consumers with pensions questions:

• Pension Wise and the Pensions Advisory Service merged to become part of the Money and Pensions Service under the Financial Guidance and Claims Act 2018. The process of developing an integrated service is ongoing. Currently, the two services still have separate websites and different functions:
  • The Pensions Advisory Service: Provides free independent and impartial help on all your private pension matters.
  • Pension Wise: Gives free and impartial guidance to consumers aged 50 or over to help them understand their options for personal or workplace pensions.
• The Money Advice Service provides free and impartial money advice
• The Financial Ombudsman Service can look into problems involving most types of money matters – from payday loans to pensions, pet insurance to PPI. If they decide someone’s been treated unfairly, they have legal powers to put things right.