Our Guide to SIPP Pension Scams & How to Claim Compensation

A Self-Invested Personal Pension isn’t the right choice for everyone. These types of pensions require an active investor that will carefully monitor their pension. Whilst a SIPP is flexible and can bring great pension growth, it comes with many risks and is not the best if you’re inexperienced.

A SIPP is a Self-Invested Personal Pension. As with all pensions, there is some potential for SIPP products to be mis-sold. Victims of SIPP pension scams can report them and claim compensation.

To fully benefit from a SIPP, you’ll need to choose the right investments and keep track of how things are developing. You might be mis-sold a SIPP, or hit by SIPP pension scams if you’re encouraged to go down this particular route despite not being an experienced investor.

Read on to find out more about SIPP pension scams and what to look out for and what to do if you have fallen victim to a pension transfer scam.

What Is a Self-Invested Personal Pension?

Shortened to SIPP, a Self-Invested Personal Pension is a product that leaves you in control. You, the ‘self’ in the product name, will select your own investments and keep track of them. That’s how this type of pension is described as being Self-Invested.

Managed properly, a SIPP could be the key to a great retirement fund. Yet, there are many risks that must be carefully considered. Not everyone has the financial acumen to take full advantage of a SIPP.

A Self-Invested Personal Pension is much more flexible than most. You’ll have access to so many investments, with the chance to make your own selections. In exchange for flexibility you’re taking on more risk, must take control of your own pension funds and may have higher charges and fees.

What Is a SIPP Pension Scam?

Intentionally, or just through a lack of knowledge and experience, some pension providers and financial advisors might wrongly recommend a SIPP. SIPP pension scams might mean that you’re encouraged to transfer your existing pension funds to a SIPP. Once you’ve moved your money, you may lose out because your pension funds are badly invested.

Any advisor should be clear about the risks of Self-Invested Personal Pensions. They should talk you through what’s involved in a SIPP and how active you’ll need to be. You should be made aware of the potential losses, and a good advisor should ensure that you know exactly what you’re getting into.

If you’ve been pushed towards a Self-Invested Personal Pension but feel that it isn’t right for you, then you may have lost retirement savings as a result of bad financial advice.

Identifying a Potential Pension Scam

Sometimes, SIPPs are mis-sold by inexperienced but well-meaning financial advisors. Often, the problem is an outright illegal scam. If you’re approached about your pension, it’s highly likely that you’re on a path to being scammed. Nobody should contact you out of the blue.

If you need pensions advice, look around for a reputable financial advisor that is waiting for you to contact them. Cold calling is a sure sign that a scam is about to take place.

In some cases, SIPP pension scammers will get their money by way of a commission for passing on your custom. Other scams result in your money being stolen, transferred to the scammer rather than a genuine SIPP.

How to Avoid a SIPP Pension Scam

Only get help from financial advisors that are approved by the Financial Conduct Authority. The FCA regulates the industry, and genuine providers of financial advice should operate under their watch.

SIPP providers might pay a commission if someone introduces new clients. Those same SIPP providers have a responsibility to check that you’ve been introduced by the right people and should check with the FCA to make sure it’s all above board, but you can protect yourself by checking these details on your own.

A scammer will happily push you towards a SIPP if they’re earning money for doing so, which means that it’s especially important to make sure that you’re not taken advantage of.

What to Do if You’re a Victim of a Pension Scam

If you believe that you’ve been a victim of a SIPP pension scam or mis-spelling, the first thing to do – if it’s only just happened – is to contact your existing provider. Your current pension provider may be able to stop your money from being transferred out. If you act fast, you could stop your pension funds from moving at all.

If it’s too late to stop your pension fund transfer, your next step is to contact the advisor that suggested the SIPP. If you don’t get a response you’re happy with; you can file a further complaint. You have up to six years to act or three years from the date that you realise you’ve been a misselling victim. If you’ve been the victim of a genuine scam, you can contact Action Fraud.

Contact the Pensions Ombudsman to escalate your claim. They might find in your favour, or decide that you haven’t been scammed. Their service is completely free and totally independent, so this is the easiest way to make a formal complaint if you’ve been mis-sold a pension.

You’re protected by the Financial Services Compensation Scheme. Thanks to the FSCS, you could be entitled to up to £85,000 in compensation. The amount of compensation you receive will replace the money you lost, and you may also be entitled to a modest sum for the emotional distress you’ve experienced.

If you have a joint pension account, the compensation limit is double to £170,000. You can use the Financial Services Compensation Scheme’s own protection tool to see how much of your pension is protected. You’ll just need to know the name of your bank, building society or credit union where your money is saved, and how much you own.


Can You Get Help After SIPP Pension Scams?

If you’ve been the victim of a SIPP pension scam, you can make a claim on your own. Alternatively, you can find a representative to make a claim on your behalf. Get advice from solicitors if you think that your Self-Invested Personal Pension was mis-sold to you.

Using a solicitor or similar service can help to boost your chance of success. You’ll be supported by an expert team that have experience of these types of claims, and how to win them. However, you will need to pay for this service, whilst going it alone costs you nothing.

Decide how confident you are making your own claim, then see if you need extra help. Often the financial hit is worthwhile if it guarantees you some of your money back.

Will You Get Your Money Back?

If you’ve been the victim of SIPP pension scams, you’re certainly not alone. Pension scams have become very elaborate, which means that many people are caught out. Pensions cold-calling is banned, so no reputable company will contact you by phone to talk about transferring your pension. Still, if you’re not aware of the rules, you can easily fall victim to these methods.

You could lose a lot of money that you’ve saved for retirement if you become a scam victim. Action Fraud’s free helpline can help you get your money back, but success isn’t always guaranteed.

It helps to question everything you’re told and everyone who gets in touch. Caution is a positive trait if it protects you from SIPP pension scams.

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