Pensions and investments are very well-regulated, but some scams and suspicious schemes still target savers. These unregulated schemes often lure people with promises of unrealistic guaranteed returns and pressure you to make decisions quickly.
Often, an unregulated introducer will encourage you to invest money or transfer your pension into schemes involving unusual assets, frequently based overseas.
What’s the catch?
- Administrative costs and fees charged can be very high.
- You will not have the same rights as with a pension regulated by the Financial Conduct Authority (FCA), like being able to complain to the Financial Ombudsman Service (FOS) or access the Financial Services Compensation Scheme.
- Taking money out of your pension before age 55 is likely to be an ‘unauthorised payment’, since it goes against the tax rules set by the government. This can have significant tax implications.
- Some of the investments associated with these schemes are very risky and may be difficult or impossible to cash in, resulting in the loss of all or a large part of your pension
What to look out for?
- Unsolicited phone calls or text messages
- A company which claims to be exploiting ‘legal loopholes’
- Transfers to an overseas pension scheme or fund
- A company which offers to help you access your pension before age 55
- The offer of a ‘cash bonus’ loans against your pension or ‘cash back’ offers
- Schemes that offer an unrealistic high rate of return
FAQs
Who should you contact if you have been the victim of fraud or a scam?
You should contact Action Fraud on 0300 123 2040 if you believe you have been the victim of fraud or a scam. If appropriate, you should report any unauthorised financial advice or transfer issues to the FCA and any breaches of pension laws to The Pensions Regulator.
What are the key signs of a pensions scam?
Pension scams can involve references to ‘legal loopholes’, accessing your pension before 55, transferring your pension fund overseas and unsolicited phone calls and emails.
However, pension scams take many forms so it is important to be vigilant and contact your pension provider, Action Fraud and/or the FCA Smart Scam website if you feel you are being targeted.
Who should I accept pension advice from?
You should only accept pension advice from an independent financial advisor who are regulated by the FCA and follow a strict code of conduct. For more general information, there are free services provided by the government, such as Pension Wise and Money Helper.
