Reverse Pension Plan Scams, What Are They?

Mark Benson

Mark Benson

Money Savings Advice Reverse Pension Plan Scams, What Are They

In many ways, the Internet has become something of a double-edged sword. There are information and advice aplenty. However, it has offered scammers a route into the homes of pension fund holders up and down the country. As soon as you realise you have made a mistake transferring your pension fund, you should seek guidance.

When looking to reverse pension plan scams, your options are limited, to say the least. Scammers play on the fact that before, many victims don’t even realise the problem. Their funds have been invested in high-risk assets or, even worse, disappeared.

It is vital that you take independent financial advice every step of the way with regards to any type of investment decision.

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Do I Have 30 Days to Change My Mind About a Pension Fund Transfer?

In theory, you do have 30 days in which you can change your mind about a pension fund transfer. However, there are two problems to consider here:-

  • Pension fund fraudsters rarely stick to the regulations
  • It can often take up to 30 days to release your funds, after which time the right to change your mind has gone

If you do manage to intercept your transfer within the 30 day period, you could ask your original trustees/pension fund administrator to reinstate your pension. This would obviously depend upon the interception of the funds before transfer.

Can I Claim Compensation for an Inappropriate Pension Fund Transfer?

In theory, you have a six-year window of opportunity in which to claim compensation for an inappropriate transfer of pension funds. You may have been misled with regards to expected returns, or the transfer was simply not in your best interests.

Assuming that the party can be traced, you may be able to claim compensation, but you would need to prove negligence.

How Can I Protect My Pension From the Fraudsters?

The vast majority of people set up a pension fund, pay into it, and then ultimately reap the rewards in later life. While there are some exceptions to the rule, the majority of people will have little or no experience in the world of pension fund administration.

So, how can you best protect your pension? Always take independent financial advice before undertaking any type of transfer or making any changes to the setup of your pension fund.

Is It Possible to Access Pension Funds Prior to My 55th Birthday?

While pension regulations tend to change on a regular basis, at this moment in time, you would not normally have access to any of your pension fund assets before your 55th birthday. Recent changes have caused some confusion amongst pension fund holders.

Unfortunately, this has created an opportunity for pension fund fraudsters to tap into this confusion. The only real legitimate reason why you may be able to access funds early is due to medical issues.

Why Did the Pension Fund Company Not Mention HMRC Tax Penalties?

Unauthorised access to your pension fund prior to your 55th birthday can attract significant tax penalties from HMRC. These tend to range between 55% and 70% of funds accessed/funds transferred. It is not difficult to see the huge impact this could have on your pension fund nest egg going forward. That is assuming that the fraudsters have not stolen all of your assets!

Imagine the situation; you have been taken in by pension fund fraudsters who have transferred your assets to a seemingly legitimate pension fund trustee. Next, your funds disappear, and then you receive a tax demand from HMRC. Ignorance is not an excuse when it comes to tax demands, and it is unlikely you would be able to avoid such penalties.

My Pension Fund Has Been Transferred; Why Can’t I Contact the Company?

One of the tell-tale signs of pension fraud, indeed any type of fraud, is the vague methods of communication. These companies can set up legitimate-looking websites, with all the bells and whistles you would expect, but when it comes to contacting them, this is not as easy.

Mobile phones, PO boxes, and other often untraceable methods of contact will be shown on the website. Once they have completed their scams, transferred potentially millions of pounds of pension funds, they can very easily disappear. Switch off the mobile phone contract and end the PO Box collection service- then they are effectively untraceable.

You will also come across occasions where the fraudsters will make excuse after excuse when you ask for contact numbers. This should set the alarm bells ringing. Have you ever worked with another adviser who was not contactable?

Is My Pension Fund Protected From Fraudsters?

While pension fund administrators/trustees will look after your pension fund, ultimately, pension fund holders have a statutory right to transfer to any other party. Nowadays, the majority of administrators/trustees will request information before completing any transfers; but they have no legal right to block a transfer.

There are ways and means of “slowing down the process” to give pension fund holders the opportunity to reconsider, but ultimately it is down to the individual.

Money Savings Advice Tip

Sadly where there is money involved there are unsavoury people who look to take advantage. If you feel you have been the victim of pension fraud and have lost money from your pension then we advise you to speak to a professional who can manage your claim properly.

Should I Regularly Review My Pension Fund Investments?

Yes. The majority of individuals will undertake an annual review of their investments, which will take in any mortgage obligations, pension fund assets, and insurance policies as well as tax planning for the future. As the majority of individuals will set up their pension scheme, pay in on a regular basis but have relatively little contact with pension fund trustees/administrators, this annual review is important.

This is your independent financial adviser’s opportunity to keep you abreast of any regulatory changes and also watch out for any scams. It is very important to build up a relationship with your independent financial adviser. They should, in theory, be your last barrier between legitimate investments and potentially fraudulent activity.


Aside from the 30 day period in which you have a right to change your mind, there is often very little in the way of protection once you have transferred pension fund assets to fraudsters. At best, you might find your fund invested in high-risk assets, and at worst, part or all/part of your funds simply “disappear.”

It is important to appoint an independent financial adviser that you can speak on a fairly regular basis. Build a relationship, build a rapport, and run all potential changes to your investments through them first. That one time they spot potentially fraudulent activity could be the difference between a prosperous retirement and no pension fund!

How Can Money Savings Advice Help You With Making a Mis-Sold Pension Claim?

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.

Money Savings Advice Author Mark Benson

Mark Benson

Mark has been writing professionally for over ten years for the financial sector. Having started in the financial world as a stock-broker in central London and then moving to equities trader Mark is one of our senior financial writers who has a vast knowledge of multiple financial sectors.

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