How to protect your pension money from scammers

Pension scams have been around for a long time, but the introduction of the new pension rules has raised new concerns that scams are possibly increasing. With over 55s having easier access to their funds than ever before, they could be an obvious target for scammers trying to relieve people of their cash. The good news is that there are some simple measures to make sure you protect yourself – and your money – from these scams.

Know the rules

One of the best ways of staying safe is knowing the rules: you aren’t allowed to remove money from a pension until you are at least 55 years of age, and only FCA-regulated companies are able to provide financial advice and carry out transfers. If you are contacted by a company that isn’t regulated by the FCA or offers pension release younger than 55, you should steer clear. To find out if a company is regulated is simple, just search for their name on the FCA register.

What is the opportunity?

Diversification is essential in financial planning, as it helps to protect your wider investments if something does not work out. Scams, however, often involve putting your money into a single investment, which is an incredibly risky strategy. The investments themselves are typically high risk as well, not to mention unregulated – bamboo, wine, carbon credits and parking spaces are just a few of the examples that scammers try to push people into. Regulated advisers may also suggest such items, but based on your personal level of risk and capacity for loss.

If you have been approached about an investment opportunity and believe it to be a scam, you can input the details on the FCA’s ScamSmart website to find out if it is regulated.

If it sounds too good to be true…

…then it probably is. A frequent claim with scams is a guaranteed return, usually very high. This should be a red flag because there are no absolute guarantees, especially for returns as large as 20%. It’s certainly true that returns that big can be made, but it is dishonest to say they are guaranteed.

Don’t be rushed

Scammers often want you to act immediately as it gives you less time to change your mind and walk away. As such, they may try and rush you into signing on the dotted line – some people have even experienced couriers arriving at their house and demanding a signature on the spot. You should be able to take the time needed to research and understand your options, and not be rushed into making an instant decision.

Research the company

If you are approached by a company you’ve never heard of before then it’s worth looking them up. A quick Google search should produce their website and possibly other people’s experiences of them. You can also look them up on the FCA register, and check on the company’s website for an FCA number. As stated above, if a company does not have an FCA number then it is not regulated.

Our managing director Jamie Smith-Thompson recently spoke to the BBC about avoiding pension scams. Click the video below to listen:

If you have questions about pension scams, including how to report them, check out our FAQs.

Have you been contacted by a scam? Tell us in the comments below.

Call 0800 304 7288 for a friendly chat about your pension

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section:

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