The Financial Conduct Authority (FCA) has some guidance in the ScamSmart section of their website. In conjunction with the recent TV advertising, there is advice and guidance on avoiding scams.
Pension scams can be hard to spot. Scammers can be articulate and financially knowledgeable, with credible-looking websites, testimonials and materials that are hard to distinguish from the real thing.
How pension scams work
Scammers usually contact people out of the blue via phone, email or text, or even advertise online. Or they may be introduced to you by a friend or family member who is also unknowingly being scammed.
Scammers will make false claims to gain your trust. For example:
- claiming they are authorised by the FCA or that they don’t have to be FCA authorised because they aren’t providing the advice themselves
- claiming to be acting on the behalf of the FCA or the government service Pension Wise
Scammers design attractive offers to persuade you to transfer your pension pot to them (or to release funds from it). It is then often invested in unusual and high-risk investments like overseas property, renewable energy bonds, forestry, storage units, or simply stolen outright.
Scam offers often include:
- free pension reviews
- higher returns – guarantees they can get you better returns on your pension savings
- help to release cash from your pension even though you’re under 55 (an offer to release funds before age 55 is highly likely to be a scam)
- high-pressure sales tactics – the scammers may try to pressure you with ‘time-limited offers’ or even send a courier to your door to wait while you sign documents
- unusual investments – which tend to be unregulated and high risk, and may be difficult to sell if you need access to your money
- complicated structures where it isn’t clear where your money will end up
- arrangements where there are several parties involved (some of which may be based overseas) all taking a fee, which means that the total amount deducted from your pension is significant
- long-term pension investments – which mean it could be several years before you realise something is wrong
Find out more from the FCA website at https://www.fca.org.uk/scamsmart/how-avoid-pension-scams