Five ways to quickly spot a pension scam

Pension scams have continued to hit the headlines over the last few months. This undoubtedly leaves a feeling of uncertainty surrounding pensions. Even more so if you’re in the position where you are starting to think about your retirement and what the options are for your pension. The impact a scam could have on your future doesn’t bear thinking about.

The best way to stay safe and keep your pension protected is to speak with a regulated specialist. If you know what to look for, it’s easy to avoid the pension scammers.

Five ways to quickly spot a pension scam 

1. Is the company or adviser pretending to be real?

If someone contacts you claiming to be from a financial company, your first step should be to check they are authorised and regulated by the Financial Conduct Authority. To do this visit their website and type in the company’s name. Clicking on the company name will reveal whether their current status is authorised or not. You should only speak with firms whose status shows as authorised on the Financial Conduct Authority’s site. You can also check the credentials of the company by visiting their website or using the contact telephone number provided. In case you’re wondering, Pension Access’s registration number is 754580.

2. Is the company using unfamiliar language?

Pensions are complex, and scammers may take advantage of this by using persuasive or jargon-filled language. If what a company is telling you is confusing, and they don’t explain what it means or what the scheme entails, it’s likely that they are a fraudster.

Look out for these words and phrases:
• Pension liberation
• Cashback
• One-off investment
• Limited time offer
• Loophole

3. Has the company or provider promised ‘guaranteed returns’?

If something feels too good to be true it probably is. If a company or person tells you there will be a guaranteed return on an investment in a short timeframe, then this is a big signal that it’s a pension scam. Make sure you understand how your pension will be invested. A scammer may pressure you to transfer your pension into a single investment or offer a particularly high rate. Money Helper and Pension Wise offers further advice.

You can withdraw certain types of personal pensions from the age of 55. Releasing pension money early is not right for everyone as it will leave you worse off in retirement.

4. Has the company or adviser said you can withdraw your pension early?

This is where a regulated adviser can help you understand what your pension options really are. You can withdraw certain types of personal pensions from the age of 55. However, only in very specific circumstances will you be able to withdraw your pension before you’re 55, such as serious illness.

If you transfer your pension with a company who promises you pension access before you are 55, you could be hit with a big tax penalty and possibly lose your entire pension pot. A company or person advertising pre-55 pension release could be trying to scam you.

5. Do you feel under pressure?

If you’re being pressured into making a quick decision about your pension, it’s likely to be a scam. If you rush your decision, it could have a damaging effect on your plans for the future. Pensions are complicated and looking to do something with your pension is a big decision to make, so taking your time is essential. You should also remember not to reveal any personal information about yourself or details of your pension until you are certain.

6. A phone call out of the blue

On the 9th January 2019, new rules passed which mean that pension cold-callers could face fines of up to £500,000. While pension cold calls are now illegal, it doesn’t mean they’ll stop.

If you receive a call and the person on the phone has information about where your pension pot is held, or perhaps the company you work for, you should still be weary. It is fine to hang up the phone call. If you think the call could have been from a scammer you should report the call to the ICO.

To help you identify if the caller is a scammer you could ask the caller questions like:

• What is your Financial Conduct Authority registered number?
• Can I call you back?
• How long have you been a financial adviser/company?

If the company or adviser is legitimate, they shouldn’t mind you finding out more information about them and the product they are offering.

Taking pension money early is not right for everyone as it will leave you worse off in retirement. Also, tax treatment depends on your circumstances and is subject to change. That’s why it makes sense to get help from a regulated specialist.