How to protect yourself against pension scams

How to protect yourself against pension scams

Pension scams are a regular occurrence and individuals need to be wary to ensure that they don’t fall foul of any attempts to extract some or all of the money stored away for retirement.

Action Fraud stated that £31 million was reported to have been lost to pensions scams between 2017 and 2020.

What to look out for

It can sometimes be difficult to recognise scammers as they can be financially knowledgeable and use credible websites and materials.

They tend to design the scams around persuading their target to transfer their investments or pension pot to them or to release funds from it. The scammer then invests this in high-risk, unusual investments.

Some of the tactics which fraudsters often deploy are:

• contacting their target out of the blue
• pressurising their target to invest quickly
• downplaying the risks to your money
• promising large or guaranteed returns which sound too good to be true
• saying that the offer is only available to their target or asking their target not to tell anyone else about it.

Steps to help ensure financial safety

There are four steps that can be taken to protect against pension scams:

1. Reject any unexpected offers: If you are contacted about your pensions or investments when you’re not expecting it, it’s highly likely it’s a scam. Be wary of any free review offers, and bear in mind that a free offer from a business you have not interacted with before is probably a scam.
2. Carry out a background check: If you’re expecting to be contacted about your pension, carry out a background check on the company contacting you to make sure they are a trusted source. Use the Financial Services Register to check that the company is FCA (Financial Conduct Authority) authorised. If the services of a firm which is not FCA authorised are used, the individual won’t have access to the Financial Services Compensation Scheme or Financial Ombudsman Service, making it unlikely they will get any money back if things go wrong. It's important to note that some scammers will pretend to be from FCA-authorised firms so it is recommended that the FCA Register is used to ensure any claims are legitimate.
3. Don’t be pressured into making a decision: Make sure you take time to check everything surrounding any offers, be wary of any investments which offer promises of returns which seem too good to be true. Crucially, don’t allow yourself to be rushed into a decision.
4. Seek impartial advice: Using an FCA-authorised financial advisor is an option for some impartial advice, but make sure not to use an advisor suggested by the company who have contacted you, as they may be part of the scam.

We are here to help

If you have any questions about pension scams or need advice on protecting yourself against them, please get in touch with a member of our Wealth Management team.

The purpose of this blog is to provide technical and generic information and should not be interpreted as a personal recommendation or advice. 

Azets Wealth Management is a trading name of Azets Wealth Management Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: Bulman House, Regent Centre, Gosforth, Newcastle upon Tyne, NE3 3LS. Company Number 05674020. Incorporated in England. Azets Wealth Management Limited is a subsidiary of Azets Holdings Limited.