Stopping chameleon pension con artists

Senior businessman with smartphone and laptop in cafe

How often are you greeted by a cold-caller when you pick up your phone? Perhaps they’ve even managed to get hold of your mobile number? You may be surprised to find that while a nuisance, annoying and relentless, these cold-calls are not always illegal. However, the scams that sit behind them are.

Since the government’s pension reforms in April 2015, pension-related cold calls, and the scams that follow are on the up. While pensioners across the United Kingdom now have more freedom over what they can do with their pension pot from age 55, fraudsters have been honing in on pensioner’s hard earned savings and targeting those who are most vulnerable.

What is a pension scam?

Pension scams vary, and the fraudsters operating these scams are master manipulators who are constantly evolving. Often pension scams originate from a call, text, or email from out of the blue, perhaps offering a free pension review.

Scams could include;

  • Promises of upfront cash
  • Offering one-off deals or high guaranteed returns
  • Encouraging you to cash in your pension and invest it with them in high-risk unregulated investments
  • Offering to unlock your pension before age 55 (also known as pension liberation or pension loans)
  • Encouraging you to transfer your pension quickly
  • Pretending to know of loopholes allowing you to get more than 25% tax-free cash
  • Promising unrealistically high returns or tax savings from overseas investments
  • Pretending to be from the government or cloning the identity of a regulated adviser or firm

While pension scams are not new, they’re becoming increasingly prevalent now that people have more options available to them when it comes to their pension. Pension freedoms mean that over-55s now have full access to their savings. Under normal circumstances, you can’t legally access your pension before age 55. The only exception is if you are in serious ill-health. If you do access all or part of your pension, you face high tax charges of up to 55%, on top of high charges for taking out one of these arrangements. You run the risk of potentially losing all your pension savings.

While these ‘offers’ may initially sound tempting, companies promising high returns from unusual, unregulated investments, or offering early access to pension savings, more often than not, turn out to be scams.

How can we stop scams?

Last year, the Chancellor launched a consultation on a pension cold-calling ban, following a petition that won widespread industry and public support. The Government is being urged to crack on with responding to the consultation and banning pension cold-calling while allowing pension providers and schemes to block suspicious transfers to help combat the devastating effect of scams. Although neither is a panacea, these actions are likely to help cut down the number of pension scams.

We were relying on a new Pension Bill to be announced in the Queen’s speech in June to address issues highlighted by the pension industry over many years to give savers greater protection. However, we, as an industry, were disappointed that there was no such Bill.

Pension scams won’t just go away without some serious action. Limiting the right to a statutory transfer could potentially safeguard millions of pounds from scammers and we hope this will feature on the Government’s agenda.

What can you do to protect your savings from scammers, con artists, and fraudsters?

It can be all too easy to be taken in by scammers, but being on your guard is your first, and best, line of defence. Being constantly alert about offers relating to your pension is key – remember the old adage, offers that sound too good to be true, often are.

While an incredibly serious issue, this isn’t something that should keep you awake at night. Following some simple steps can ensure that your savings are protected against pension fraudsters.

Top tips to avoid scammers

  1. Try not to engage in conversation with cold-callers. The safest thing to do is to hang up.
  2. Think about installing call blocker technology on your phone.
  3. Never give out personal information, including your bank details.
  4. Always check the Financial Conduct Authority (FCA) online register if you doubt a company.
  5. Check the FCA ScamSmart warning list for known investment scams.
  6. Use the Pension Advisory Online tool to identify a pension scam if you’re worried about information given or action you’ve taken.  
  7. Never feel pressured into making a quick decision, and read any documents carefully before you sign on the dotted line.
  8. Always do the research. As always, if in doubt, use a regulated adviser. You can find one of these using the unbiased website.
  9. Report any concerns to your pension provider, adviser, or Action Fraud by calling 0300 123 2040 or online at