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Pension Scams - Beware!

It’s sad to know that more people than ever are taking advantage and scamming the elderly members of our community in the UK. Things such as one-off investment scams and upfront cash offers are being used to take millions of pounds nationally from savers. Here are the types of pension scams many unscrupulous firms and individuals are using including how to spot them before its too late.

The range of scams that allow a lifetime’s worth of savings to disappear in a second are vast.  When investing money we have worked for our entire lives, we must be careful.

From this month (April 2015), you have more choices to make in regard to your pension pot.  This means it is extremely important we take care where we invest our money and whom we invest it with. Potential scammers are likely to see these new rules as an opportunity to try and persuade people to cash in their pensions and pass on the money to them to invest.

Some of the most common tricks used to get people to invest include:

  • Claiming to know of loopholes that will let you get more than the normal 25% tax-free cash
  • Telling you they can help you or someone you know unlock your pension before age 55
  • Promising very high returns from overseas investments

It is only in extreme circumstances someone under 55 can access their pension, for example if someone was having excessive health problems.

Companies who target savers claiming to help them access their pension savings early are taking part in what’s known as 'pension liberation fraud'. Taking out your pension savings early can result in tax charges of more than half of the value of the money you take out. Those being targeted are not usually told about the potential tax problems they could come to face.  This is in addition to high charges, typically 20-30%, that the scammers will initially charge for letting you enter into one of these arrangements.

It is hard to spot a scammer as they will obviously try to hide the fact at all costs. Some may be very good and appear to be very professional or claim to be speaking on behalf of a government initiative; others will have websites and even uniforms.

More obvious signs from untoward firms are things such as:

  • Approaching you out of the blue regardless of your age about pensions
  • Not wanting or allowing you to ring them back
  • Giving a mobile number and a PO box address as the only contact details

One of the simplest precautions to take in order to stay safe is making sure the firm is registered with the Financial Conduct Authority (FCA). To be sure it’s the same firm, call them back on the switchboard number given on the FCA’s website not any other number they may give you. If you think you have been scammed or that someone has tried to scam you, contact the FCA’s Consumer Helpline on 0800 111 6768.

Author: Dan Potter

CPC Worldwide

DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic. 

Published on 9th April 2015
(Last updated 28th March 2018)

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