Are you one of the millions of people in the UK who have been targeted by pension fraudsters? Have you seen an online pension scams leaflet, or perhaps something has been put through your door?
All of these fraudulent schemes have one thing in common; they offer returns that literally seem out of this world. So, how can you protect yourself from the pension fraudsters?
As with any investment fraud, if the promised returns look too good to be true, that’s because it probably is. If you are not an experienced pension administrator, you should take advice before undertaking any transfers.
There are numerous tell-tale signs when it comes to pension scams, which we will cover in this article.
We update all our guides regularly. If you are researching pension fraud and we haven't got an exact guide that helps you, keep coming back as we update daily.
The simple answer is, probably not. One of the more prominent tell-tale signs of a pension scam, which is never detailed on the pension scams leaflets, is the transfer to unregulated schemes.
Many of these schemes are simple fronts for the fraudsters, with your funds being pillaged on receipt. In theory, it should be possible to hold the fraudsters to account but finding them is a whole different matter!
One of the common factors associated with pension fraud is the often unusual nature of proposed investments. These might include overseas property/hotels, renewable energy bonds, together with forestry, parking, and storage units.
While these are all well-known types of investment, they tend to offer a high degree of risk, assuming your funds even make it to the investment stage! Interestingly, you will find the fraudsters tend to focus on “hot trends” such as renewable energy bonds.
This often gives the idea that pension fund investors are “getting in at a relatively early stage.”
It is a statutory right of any pension fund holder to transfer their assets to a different administrator. So, while trustees have a legal obligation to ensure that the fund is administrated correctly under their control, they have limited powers when it comes to transfers.
This has been noted by The Pensions Regulator, although it is something that is unlikely to change. However, there are ways in which the trustees can look to “alert” members about potential issues.
Some of the more active pension trustees will ask you to fill out a transfer information checklist before transferring your pension fund assets to another party. The Pension Scams Industry Group provides a code of good practice and due diligence for pension trustees.
As a consequence of the transfer information checklist, your trustee may alert you to various concerns. They can’t stop you from transferring, but they can make you aware of issues to consider.
If a pension trustee believes that a transfer may be potentially fraudulent/illegal, they would likely make you aware. This information will be placed upon your file as a means of protecting the trustees from legal action, but ultimately it is down to the member as to whether the transfer goes ahead.
You will often find that trustees will report their concerns to Action Fraud who can take action.
Take independent financial advice. One of the core aims of pension fund fraudsters is to gain your trust. This can be done in various ways, promising extremely high investment returns or simply offering “free pension fund reviews.” The key here is control.
They are effectively taking away control of your assets from you. So, it is essential that you retain control of your assets, and you are not rushed or pushed into making instant decisions you may regret.
The vast majority of financial advisers will be able to offer assistance with your pension fund assets. On occasion, you may find that your pension fund trustees are able to offer advice or introduce you to independent third parties.
Some trustees may shy away from recommending independent pension advisers because they may be held partially liable if anything was to go wrong. The Internet is a hive of information regarding pension funds - you should be able to find a regulated adviser in your area.
In some shape or form, yes. It may be that you are already working with an independent financial adviser, and they may be able to offer “free advice” due to the level of a business carried out in the past.
However, if you have to pay a one-off fee to obtain independent pension advice, it is worth it, even if just for peace of mind. Don’t forget; the decision to transfer pension fund assets to a third party is yours and yours alone.
Many pension fund fraudsters will tempt pension fund holders with the promise of releasing funds before the age of 55. At the moment, you can access your pension fund assets when you turn 55.
There are some extenuating circumstances in which you may be able to access funds earlier, predominantly medical-related, but normally this is not possible. If you were to access your pension fund before turning 55, you might well be hit with a huge tax bill.
At this moment in time, tax charges for unauthorized pension payments/transfers range between 55% and 70%. Very often, you will find that the fraudsters fail to mention this! So, in some circumstances, the fraudsters will steal your pension fund AND leave you with a potentially huge HMRC tax bill. This must be the worst kind of double whammy for those looking to enjoy later life!
When you read the above advice regarding pension scam leaflets and how to avoid fraudsters, it all looks relatively straightforward. This begs the question, why are so many people still succumbing to pension fraud despite all of the warnings from regulators and the financial services industry?
We have even seen instances where fraudsters have targeted victims by offering “protection against fraudsters,” which can often create a high degree of trust.
So, how do you protect yourself? Simple, seek independent financial advice, and take it!
Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for a mis-sold pension and they can do the same for you.
Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.
How does Money Savings Advice work
Money Savings Advice is an independent editorial company providing detailed information about numerous financial niches with the aim of helping consumers make informed financial decisions. We aim to provide hints, tips and techniques to help you make your money work for you. However, we are not perfect, and we accept no liability if anything we write about goes wrong.
Money Savings Advice is a trading name of RMM Digital Publishing Ltd. Registered trading address, First Floor, 85 Great Portland Street, London, W1W 7LT. Trading in England and Wales, company number 11550143 with data protection number ZA747669.
Money Savings Advice is a trading style of Consumer Credit Justice Ltd.
Consumer Credit Justice Limited is authorised and regulated by the Financial Conduct Authority, Reference 834486. We are regulated by the FCA in respect to claims management activities.
You do not need to use the services of Consumer Credit Justice, or any other claims management company, to make a claim. You are free to choose an independent solicitor of your choice.