Lost money in a pension scam?

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Pension scams explained

Types of pension scams

Scammers are using increasingly sophisticated methods to steal your retirement money. Here are some of the most common types of pension scams and the warning signs to watch out for.

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    Early pension access scams

    Scammers tempt victims with offers to release pensions early. Often named “pension liberation” or a “pension loan”, fraudsters may claim you can borrow money from your pension through legal loopholes. However, you can’t take money from a pension until you’re 55 or over, so any approach like this is a scam.

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    Pension review scams

    If you’re offered a free pension review, it’s likely a scam since professional advice on pensions is not free. In these “reviews”, criminals persuade you to transfer your pension into a high-risk scheme you may not be familiar with, such as an overseas property. They lure you in with high-pressure sales tactics and promises of high returns.

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    Hard-sell pension scams

    Legally, authentic pension providers and regulated financial advisors can’t hard-sell or offer investment schemes that pressure you to act quickly. So, if someone is rushing you to decide about a pension scheme, it’s highly likely it’s a scam.

How to spot a pension scam

Messages from “pension providers” or “brokers”

There has been a ban on pension cold calling since January 2019. This means if you receive communication you didn’t ask for—whether that’s a phone, text message, email or in person—it’s highly likely that it’s a type of impersonation pension scam. To double-check, you can contact your pension provider to see if the communication was from them.

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Promises of "tax loopholes” or “tax savings”

Scammers often lure in victims with inviting offers that claim to bring financial benefit. For example, they may mention “tax loopholes” or “tax savings” that can offer potential savings. They might also use vague and misleading terms like “pension liberation”, promising better returns or early access to your pension.

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Limited time offers

Fraudsters often try to rush you to make a quick decision on their offer. They might claim the pension opportunity is time-limited, and that you’ll miss out if you don’t act now. These pressure tactics are designed to force a decision and prevent you from asking questions or seeking official advice.

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Liam Ben Ari, Head of Crypto Investigations at WRS

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Pension Scam FAQs

  • Do pension companies contact you?

    Pension companies can contact you, for example, about your annual statement. However, they’ll never contact you out of the blue.

    Cold calling about pensions has been banned in the UK since January 2019, so if you receive unsolicited communication, such as by phone or text message, it’s very likely a scam. If you’re unsure, we recommend contacting your pension provider to see if the communication was from them.

  • What are the risks of transferring a pension?

    Transferring your pension can provide some benefits, but it also comes with many risks to be aware of. These include: 

     

    • Loss of benefits: When you transfer a pension, you may lose valuable benefits, for example, loyalty bonuses, a tax-free lump sum, or guaranteed annuity rates (GARs).  
    • Exit fees: Some pension providers charge exit fees, which can significantly reduce the amount you can transfer.  
    • Increased charges: The new pension scheme may come with higher annual management charges or hidden fees that reduce your savings over time.  
    • It can take time: Pension transfers aren’t instant. They can take several weeks or months, depending on the providers involved. During this time, your funds may not be invested, meaning your pension could miss out on investment opportunities.  
    • Scams: One of the most serious risks is fraud. Scammers often target people looking to transfer their pensions, offering early access to funds, high returns, or one-off investment opportunities. These scams can include investment scam tactics that promise unrealistic returns or impersonation fraud, where scammers pretend to be legitimate financial advisors. They can be extremely convincing too, with some victims losing entire pension pots in some cases.  

  • What are red and amber flags from pension providers?

    In the UK, red and amber flags were introduced to protect people from scams. These flags help pension providers decide whether a transfer should be stopped or delayed. Here’s what each flag means: 

    • Red flag: This means your proposed transfer is stopped as there’s a high risk of you being scammed. Your pension provider will get in touch to explain why the transfer won’t be proceeding. They will also explain how you can complain if you don’t agree with their decision. 
    • Amber flag: This means your transfer is delayed until you get free guidance. Reasons for this include unusually high or unclear charges, unregulated, high-risk or overseas investments, and an unclear or unusual structure. You can still decide to make the transfer, but you’ll need to book a free guidance test first. This is when a pension specialist will outline the potential risks and impacts of transferring your pension

  • What should I do if I’m a victim of a pension scam?

    If you think you’re a victim of a pension scam, contact your pension provider immediately. They may be able to pause the transfer if the payment hasn’t been taken, or it’s in the process of being taken.

    After contacting your pension provider, if the transaction couldn’t be stopped, you should contact legal experts specialising in wealth recovery and pension scams to help you. Time is of the essence when it comes to recovering lost funds, so as soon as you realise you may have been scammed, contact experts. If this is the situation you are in, contact us.

    The next step is to report the pension fund fraud to the police and also other fraud support companies, such as FCA Scam Smart and Action Fraud. They help to regulate different financial services and markets, so could help to prevent the pension scam from occurring again, as well as providing any information that could be useful.

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