Phone ringing? 7 ways to spot and avoid pension scams

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They want to share an investment opportunity that not many people have heard of, they’re only sharing it with a few carefully selected people. Would you consider transferring your pension?

Around 11m consumers received unsolicited contact about their pensions over the past 12 months. Almost all of them are scams and statistics suggest that people aren’t that great at recognising them. People are losing hundreds of millions of pounds through fraud, and condemning themselves to a tough retirement. Not all pension scams are the same, but they do share a number of common characteristics. Here are the top 7 to look out for:

  1. The biggest give-away is that they approach you. That could be over the phone or by text. Legitimate pension companies do not do this. It’s against their code of ethics. They certainly won’t ask you to part with cash over the phone.
  2. They have a single, slightly unusual investment – storage solutions, truffles, woodlands. The rate of return will look superficially attractive at, say, 6-10%, which looks good at a time when interest rates are 1%. They will encourage you to put a large sum into one investment, rather than a diversified bunch of investments (which is the best practice).
  3. They’re in an unusual jurisdiction – Malta, the Czech Republic, Hong Kong – if you’re off UK shores, you’re out of the reach of UK protection and you have no redress if things go wrong.
  4. You’ve never heard of them, but the name sounds vaguely familiar - You may mistrust banks and other ‘big money’ operators – life insurers, fund managers and so on – but they have to abide by certain rules, and they have reputations to lose.
  5. More recently, a worrying trend has been to change the name just slightly – or to set up fake websites in the name of legitimate operators. This has happened with Halifax and Vanguard.
  6. They offer free advice. Financial advice is expensive, so being offered a ‘free pension review’ is attractive, but they will simply be leading you to the same investment.
  7. They offer access to savings before 55. There are only very specific circumstances – such as being diagnosed with a terminal illness – when you can access your pension pot before 55 without facing very significant charges.

Don't be fooled by...

  1. A nice website – anyone can cobble together a decent looking website and a few marketing brochures. In fact, many scammers use professional looking websites and leaflets to fool their victims.
  2. Coming up high on a Google search for ‘pension transfers’ – Google can’t discriminate as to whether something is legitimate or not.

Dealing with it

Many people don’t like to be rude, or don’t like to assume that people are trying to scam them. If you’re not comfortable just putting the phone down (which is what we recommend), here are some perfectly polite questions you can ask.

  1. Can I call you back when I’ve had a chance to think about it?

They never want you to think about it. They know full well that if you talk to anyone about it – friends, family, everyone at the golf club – someone is going to work it out.

  1. Can you give me your FCA number?

Anyone trying to persuade you to put your pension with them needs to be authorised by the FCA. Check here:

  1. Can I just put a small amount?

Scammers are usually going for the big deal. They want you to transfer the lot.

  1. I’m sorry, there are clearly large amounts involved and I want to make the right choice, let me consult my financial adviser/Citizen’s Advice

Check the FCA’s ScamSmart -

  1. I need to check with my current pension provider

If you are transferring a pension, your current provider can check the HMRC registration of the new scheme to ensure it is legitimate.

For a list of trusted private pensions providers that we have personally checked out, have a look at our Private Pensions Best Buys.

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