How to protect your pension savings from fraudsters

8 minutes

After saving for years into a pension fund, one of the worst things that can happen is being targeted by a scammer. But there are tell-tale clues that often give fraudsters away.

We talked to an expert for tips on avoiding pension scams and what to do if you come across a rogue ‘adviser’.

  • The most common pension scams
  • The six key signs that it could be a scam
  • What to do if you suspect someone of being a fraudster

Don't let a pension scam ruin your retirement plans

Throughout your working life, you’ll contribute a portion of your monthly salary into your pension savings. Unfortunately, there are people who target pension savings with scams.

According to figures from Action Fraud, 253 victims reported pension fraud in 2017 and £23 million was lost to pension scammers – an average of £91,000 per victim [1]. But what are common pension scam tactics and what can you do to avoid them?

We talked to James Glover, spokesman for The Pensions Regulator, the UK’s regulator of workplace pension schemes, to get his tips on how to keep your pension savings safe from fraudsters and what to do if you suspect you’ve been scammed.

What are the most common pension scams?

‘There are a range of pension scams but the one we are currently trying to tackle is based around pension liberation,’ explains James.

‘These are ones where people are contacted, usually with a cold call, and offered things like a free pension review, an amazing limited-time offer, a great return on their investment or a tax-free advance on their pension – even if they’re not 55.’

The term ‘pension liberation’ is used to describe when scammers try to trick people into believing that they can withdraw a sum of their pension before the age of 55, which the government currently only allows during rare instances, such as terminal illness.

The fraudsters will play on the fact that they have discovered a legal loophole, which the High Court ruled doesn’t exist back in 2014.

‘As far as we’re concerned, if it’s a cold call about your pension, it’s a scam,’ adds James. ‘There’s no such thing as a free pension review and the offers talked about are usually exotic, and therefore unregulated.

‘There are some who will bolster their attempts to get you to sign up using flashy websites, creating a site with some domain around freeing up your pension. In some cases, they will even include some of the anti-scam messaging in there to try and make themselves look legitimate, but they aren’t.’

How to avoid a pension scam

From The Pensions Regulator’s perspective, there are six key signs that you have been contacted by a fraudster:

  1. If it’s a cold call
  2. The offer of a free pension review
  3. Other exotic or unusual offers
  4. High-pressure selling tactics
  5. Claims of great investment returns
  6. Cash-back on your pension tax free before you’re 55 years old

‘People may struggle to remember all of those,’ says James. ‘That’s why there is a list of all the signs that you need to look out for on the ScamSmart website.’

The process works like a checklist, where you can cross-reference everything you’ve been told and how you were contacted, and it will flag whether or not the offer seems suspicious.

You can even check the adviser’s name to see if they’re regulated by the FCA. If you’d prefer, you can run through the same checklist over the phone by calling the FCA’s helpline on 0300 500 8082.

‘Realistically, the best way to avoid a pension scam is to just say no,’ adds James.

What to do if you suspect someone of being a fraudster

Even if no money has changed hands, if you think someone is trying to scam you, you should report it to The Pensions Regulator.

‘If you don’t report it, they’ll just carry on doing it until they get stopped,’ says James. ‘The key for us is for people to report it as soon as possible.’

Again, you can report any scam or unauthorised firm by heading to the ScamSmart website.

But what do you do if you’ve already handed over money and are questioning the legitimacy of the adviser?

‘If you have handed your money over for some reason, or you find out that a relation or friend has, you or they can go onto the ScamSmart website and go through what needs to be done to try and get it back,’ explains James.

‘The first step is report it to Action Fraud. They will work out who the best person to investigate and deal with it is. It could even be that there’s an investigation already looking into it, and they can add you to the case.

‘Unfortunately, though, until you tell us, the money you handed over could continue to be spent.’

‘Ultimately, the phrasing that we’ve used before is: if it looks too good to be true, it is,’ concludes James.

It’s best to remember that, although the benefits on offer may sound attractive, there is a very high chance that you will end up severely out of pocket if you take up the ‘exclusive, one-time deal’. And if you suspect you, or someone you know, has fallen victim, you should report it straight away – even if it’s just to stop the fraudsters scamming someone else.


[1] Police UK Action Fraud, 2018. Action Fraud. Victims of pension fraudsters lost an average £91,000.