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Pension scams

More about pension liberation fraud and safeguarding vulnerable adults

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Pension liberation fraud

Pension liberation also known as 'pension loans' and 'pension scams', is the transfer of pension savings to an arrangement allowing you access to your funds before the age of 55.

In rare cases, such as terminal illness, it's possible to access funds before age 55 from a pension scheme. But most of the time, promises of early cash are false and likely to result in serious tax penalties.

When pension liberation becomes fraud

Pension liberation can be illegal. The victims are often misled about the fees, penalties or income tax they’ll have to pay. These hidden costs can be more than half of the value of the pension plan.

Pension liberation can mean tax charges and penalties of more than half the value of a person's pension savings, and those targeted are usually not told about this.

How you could be targeted

Companies sometimes target savers claiming they can help them take their pension cash early. This may be through websites, mass texting or cold calls. Be very cautious about giving out information in response to a text or cold call. Make sure you know who you're dealing with.


Safeguarding vulnerable adults

A vulnerable adult is someone who is or may be:

  • in need of community care services, by reason of mental or other disability, age or illness
  • unable to take care of themselves
  • unable to protect themselves against significant harm or exploitation

People can also be vulnerable if they haven't had experience of financial matters, like investments, pensions and share-dealing. Criminals often target these people and take advantage of them.

A report by The City of London Police revealed how vulnerable adults are being exploited by so called friends and family, small-time fraudsters and organised criminals, with losses from a few pounds up to millions of pounds.

Financial crime is the second most common type of abuse experienced by older people in the UK, with approximately 86,500 people aged 66 and over subject to financial abuse over a 12 month period.

Fraudsters selling fake share deals, known as boiler room fraud, land banking or operating lottery scams are increasingly targeting people with access to products like we provide at LV=.

If you know or suspect a vulnerable person is being financially abused, you should report it to police or social services.


Pension related scams

  1. Investment scams are often difficult to spot as they’re designed to look like genuine investments
  2. People operating investment scams use very sophisticated techniques to build trust and can convince even the most experienced investors out of their savings
  3. Those most at risk are people in retirement who are actively seeking an investment opportunity
  4. Pension changes for April 2015 have increased the population of potential targets
  5. Fraudsters are targeting people as you can now access your whole pension fund (minus tax charges) as opposed to a tax free sum limited to 25% plus a regular income.

How to do the scams work?

We are aware that people are being contacted unexpectedly for a ‘free pension review’.

It could be a phone call, an email, text message or an offer in an online advert.

While these offers appear to be legitimate, most of the firms and individuals involved in these offers are not authorised or regulated by the Financial Conduct Authority.

What do I do if I am contacted?

If you get cold-called, the safest thing to do is to hang up, as chances are the investment is very risky or a scam.

The 'free review' scam is designed to persuade you to move the money in your existing pension pot to, at best, a high-risk scheme or, at worse, directly into the hands of the fraudster.

You may be promised guaranteed returns significantly higher than those generally available to tempt you to take up these offers.

Some of the firms and individuals contacting the public say they represent the Government’s new, free and impartial guidance service called Pension Wise, set up to help individuals understand the retirement options available to them from the age of 55.

Remember, if you get these unsolicited offers via email, text or online adverts, it’s best to simply ignore them.

Pension Wise never cold calls

If someone cold calls you saying they are calling from Pension Wise, you can be assured that they are a fraudster, and only looking to add legitimacy to what they are trying to do - get their hands on your pension pot.

What are the risks?

If the 'investment opportunity' is a scam, you stand to lose all of the money that you have invested.

If there is an actual investment, your pension pot is typically invested in unusual, high risk investments such as overseas property, forestry, storage units, care homes, biofuels and therefore there is a significant risk that you would lose some or all of your investment.

It might also be difficult to sell any investments to get any of your money back.

In either case, it is likely that the funds you had earmarked to provide for your needs during your retirement will be significantly reduced and possibly lost completely.

In addition, if things go wrong you will not be able to complain to the Financial Ombudsman Service or claim against any compensation schemes as the firms and individuals involved in these scams are not authorised and regulated by the Financial Conduct Authority.

Remember, if an investment opportunity sounds too good to be true then it usually is.

How can I protect myself and my investments?

If you need investment advice, then you should go to an adviser that is authorised and registered by the Financial Conduct Authority.

If you need help in finding a regulated adviser then please visit www.unbiased.co.uk where you will be able to search for an authorised and regulated adviser near you.

If you have any concerns in respect of any unsolicited contact about your pension, please call the LV= Financial Crime Department on 0800 633 5760.

If you suspect fraud

If you have an LV= policy:

Call us:
0800 633 5760

Email us:
FinancialCrime
Intelligence@lv.com

If you don't have an LV= policy:

Report your suspicions to the Insurance Fraud Bureau

Insurance fraud

Find out about types of insurance fraud and how to avoid them like:

  • Induced motor accidents (cash for crash)
  • Illegal insurance intermediaries or 'Ghost brokers'

More information on insurance fraud

How financial crime affects you

Find out about financial crime and tips to stop you becoming a victim:

  • How we fight financial crime
  • Tips to avoid becoming a victim of financial crime

More information on fighting financial crime

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