Protecting yourself from pension fraud

Keeping you and your money safe is our top priority, and we have stringent safeguarding measures in place to help protect all our customers. But there are also steps you need to take to protect yourself from fraud.

To help you identify potential scams and stay safe, we’re publishing a series of articles on fraud protection. This article looks at pension fraud and scams.

What is pension fraud?

Pension fraud is when someone tries to trick you into sending them some or even all of your pension.

Scammers will often pretend to provide investment opportunities, free pension reviews, or ways for you to exploit a ‘loophole’ to withdraw your pension early or free from tax.

Often they’ll contact you out of the blue, pressuring you to make a decision quickly or offering deals that are too good to be true.

An example of pension fraud

Laurie had recently retired, and he had been thinking for a while about the best way to manage his pension moving forward.

One day, Laurie got a call from Emily, a specialist at an investment company offering to review his pension arrangements. He’d heard good things about the company, and Emily was personable and polite, so Laurie agreed.

Emily said that Lauire could get much more from his money if he withdrew a lump sum and invested it with the company she worked for. They had a range of ready-made portfolios which were low risk and offered good returns.

Laurie decided to withdraw 25% from his pension tax-free and, with Emily’s help, he moved the money to a company account. The account had a different name to the company, but Emily said this was because it was a protected holdings account separate to the business.

Emily said Laurie would receive a welcome pack and starting statement in the post within five working days, but nothing ever came. When Laurie got in touch with the company to ask about his investment, they said they had no record of any transactions.

Emily was a scammer impersonating a specialist at the company, and Laurie had lost his money.

Five tips on how to protect yourself from pension scams

1.      Don’t trust cold callers

It’s illegal to cold call someone about a pension, so if you get a phone call out of the blue then it’s probably a scam.

Even if the company or person calling you is genuine, they’re breaking the law and you shouldn’t trust them with your money. If you get an unsolicited call about your pension, hang up.

Likewise, be suspicious of any other kind of unrequested communication, such as emails, letters, texts, or social media messages.

2.      Watch for warning signs and stay calm

When you’re dealing with a possible scammer, there are some behaviours that should set alarm bells ringing.

Many scammers try to heighten your emotions to make it harder for you to think rationally. They might be pushy and rush you, perhaps by giving a time limit on an offer, or they may try to excite you with promises of huge returns.

It’s important that you stay calm, slow down and take a step back. You should always carefully consider any decisions about your pension. And if the person you’re dealing with tries to pressure you into making a snap decision, that’s a big red flag.

3.      Be suspicious if an offer sounds too good

Another warning sign is when an offer sounds too good to be true. If a company offers you high returns and low risk, or a way for you to get more of your pension tax-free, it’s likely a scam.

Look out for phrases such as ‘loophole’, ‘pension liberation’ and ‘savings advance’. And be wary of any firm offering you a new, unusual or lesser-known way to manage your pension.

4. Verify if an opportunity is genuine

If you are considering a change to your pension, make sure whatever opportunity you’re looking at is genuine. For instance, check that you’re dealing with the actual company and not someone impersonating them by contacting the firm using its official details.

Similarly, make sure you navigate to a company’s website by typing it into your browser. Clicking an email link or an advert could take you to a cloned website.

You can find company details on the Financial Conduct Authority’s (FCA) Register, if they’re authorised by the FCA. If they’re not authorised, you won’t be protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS) and your money may be at risk.

The FCA also has a Warning List, which shows companies known to be acting without authorisation or that have been cloned by scammers.

5.      Seek advice and guidance

Finally, it’s always a good idea to talk through any financial plans with others. Friends and family can help you take a step back and avoid doing something rash, while a pensions specialist can help you make smart decisions.

The Money and Pensions Service offers free, impartial guidance. It also runs Pension Wise, a government-backed service that offers a free appointment with a pensions specialist to explain your options and provide more information about pension scams.

You may also want to find a private financial advisor. Just be sure to follow the advice above when choosing an advisor and make sure they’re FCA regulated.

If someone targets you

If you suspect someone is trying to scam you, you can report it to Action Fraud by calling 0300 123 2040 or by using their online reporting tool, and you can report it to the FCA.

You should also speak to your pension provider if you’ve agreed to transfer your pension but now suspect it may be a scam. If the transfer hasn’t yet taken place, they may be able to block it.

The Money and Pensions Service can also help. Reach out to them through MoneyHelper, which is the service’s consumer-facing arm. Their experts may be able to guide you on what to do next.

People who’ve been a victim of pension fraud may be targeted for ‘secondary’ scams. Criminals may claim that they can help you recover lost money, or they may use any stolen details as the basis for another scam. Bear this in mind and be vigilant.

If you’ve been a victim, you can also get free specialist help from Victim Support.

More information on pension fraud

Some of the organisations and websites we’ve listed above provide a treasure trove of information, guidance and resources – particularly Pension Wise. You can also find lots of useful articles on the MoneyHelper website.

As well as checking the FCA’s Register and Warning List, you can also find other information for consumers and firms on the FCA website. There’s also a tool called ScamSmart, which can help you check investment opportunities.

Action Fraud, the UK’s cybercrime reporting centre, also has plenty of useful resources – as does Victim Support.

Finally, we’re always more than happy to help our customers. If you’ve got any concerns or questions about the security of your Currencies Direct funds, or need guidance in relation to a transfer, please do get in touch.

You might also want to read our article on investment fraud, as the two types of scams share similarities.