How not to fall for pension scams and to keep your pension safe


Government figures show that almost 11 million pensioners are targeted with cold calls every year and that those who’ve been scammed have lost millions. Here’s how to avoid pension scams and to keep your pension safe.

Q. I’ve been contacted by someone who knows about the company I work for and my pension scheme. Are they plausible and, if not, how are they getting the information?

The Pensions Advisory Service, which is a government-funded and independent pensions information service, says scammers may find out information about you to make themselves seem plausible. They may know:

  • Your name and age;
  • The company you work for and whether there’s been a major change there. This could include a wave of redundancies or the closure of a particular office or branch;
  • Your pension scheme provider or some information about the pension (for example, if there’s been an announcement that the pension scheme will change or be closed).

SAVVY TIP: The scammer/fraudster may have got your information from a range of online sources. These could include LinkedIn (your own personal page and group pages from the company you work for), social media sites such as Facebook and Twitter and job sites (where you may have posted your CV). Even if you’ve not posted this information, someone else may have done so. It’s worth Googling yourself and/or checking what’s readily accessible online.

Personal information is so valuable to a fraudster because it’s easier for them to get your trust if they appear informed. Be on your guard.

SAVVY TIP: The website isn’t necessarily one that’s used by scammers for pension scams, but I was surprised at how much information is on display. If you want your details to be taken off, you have to fill in a form called C01 Record Removal form, which you can download.

Q. I’ve been called by a firm of financial advisers saying I qualify for a free government pensions review. Do I?

A. No, I’m afraid not. This is one of the most plausible sounding scams currently doing the rounds. If someone rings you up and says you qualify for a free pensions review, put the phone down. The only exception is if it’s your existing financial adviser and you have invested your pension through them.

If you have a pension ‘pot’ type of pension and can make use of the ‘pension freedoms’ introduced in April 2015, you’re entitled to some free guidance from a government-funded service called Pension Wise. You can read more in my article called  How will the government’s Pension Wise service work?

The free review in itself isn’t the scam. But if you agree to a review after a cold call, you’ll be told that your pension isn’t performing very well and you should transfer it. At best, your pension could be transferred into a fund with high fees and at worst you could lose the lot if the firm disappears.

SAVVY TIP: Pension Wise will never, ever cold call you. You have to make the first contact if you want your free guidance. If someone says or implies they’re from a ‘pensions review’ or ‘government review’ service, and they’ve cold called you, they aren’t.

Q. I’ve had a call from an adviser I’ve heard of who says I should move my pension to get a better return. They were quite aggressive. What should I do?

A. Be very wary about these calls. The Financial Conduct Authority has warned about ‘cloned’ financial companies, where rogues assume the identity of genuine financial advisers or asset companies. You can read the FCA’s warnings about cloned and unauthorised firms on its website.

If you’re contacted by a cloned company, you may think you’re dealing with a genuine firm that’s been authorised, but you won’t be.

Even if the firm hasn’t been cloned, I’d still be very wary about making any financial decision on the basis of a cold call. Investment firms aren’t allowed to cold call anyway.

Q. I’ve been told I should invest in something tangible that I can understand, and not keep my money in shares. Should I?

A. This is an argument that might sound attractive, but I’m afraid it can be used by unscrupulous companies to try and get you to part with your money.

A number of companies are advising people to invest their pension money in unusual investments, such as forests, overseas property, car parking bays in the Middle East, self storage units and bamboo plantations.

SAVVY TIP: Be aware that these investments are generally not regulated. That means if you’re advised to put your money into them and you turn out to have been given bad advice or the firm goes bust, you may not have the same access to official redress or compensation schemes.

Q. I’ve been called by a firm that’s advised me to transfer my final salary pension so I can take money out of it.

A. In many cases, transferring a final salary pension to a pension ‘fund’ is a really bad move. There are some situations when it may make sense, but you will generally be giving up very valuable benefits by transferring. These could include having a guaranteed income which will normally rise with inflation and your husband, wife or civil partner getting a pension when you die.

SAVVY TIP: The biggest risk is that you are giving up a guaranteed pension income for one where the amount you will be able to take in income is not guaranteed. If you can afford to take that risk because you have lots of guaranteed pension income from other pensions, it may (and I emphasise ‘may’) be worth exploring. But if you need to have a regular income month in, month out and you don’t have enough money from other pensions to live on, transferring your final salary pension is probably rather too risky.

I would recommend contacting the Pensions Advisory Service by phone and explaining your situation and what you’ve been advised to do. They are not financial advisers but are a free advice and information service set up by the government. You can ring them on 0300 123 1047.

Q. How do I know if a call is a scam or genuine?

A. I think there are three warning signs to look out for. The first thing is that if they are cold calling you. A company that cold calls often puts would-be customers under a lot of pressure.

Secondly, if you’re being offered a free review but very quickly they try and sell you something or get you to transfer your pension to them.

And thirdly if they don’t warn you about the downsides or seem very interested in what you could be giving up, or spell out the fees.

Q. I think I may have been scammed. What do I do?

A. If you haven’t yet acted on the information you’ve been given, contact the Pensions Advisory Service on 0300 123 1047 and check it out with them. They will definitely be able to tell you whether what you’re being encouraged to do is a scam. If you’ve already transferred your pension, contact Action Fraud.

If you want to read more about pension scams, there’s information on the Pension Regulator’s website and a leaflet about pension scams that you can download.

Q. I’ve heard the government is going to ban cold calls for pensions – when will this take effect?

A. In 2016, the government announced that it would ban cold calls for pensions. However, this hasn’t yet happened. There was an opportunity for this to be included in a finance bill last week but it didn’t go through. I’ll update this article if and when the current government acts on a promise made over a year ago.


Related articles:

How to avoid investment scams

Early pension release – could you lose all your pension?

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