Five ways to quickly spot a pension scam

Pension scams have continued to hit the headlines over the last few months. This undoubtedly leaves a feeling of uncertainty surrounding pensions. Even more so if you’re in the position where you are starting to think about your retirement and what the options are for your pension. The impact a scam could have on your future doesn’t bear thinking about.

The best way to stay safe and keep your pension protected is to speak with a regulated specialist. If you know what to look for, it’s easy to avoid the pension scammers.

Five ways to quickly spot a pension scam 

  1. Is the company or adviser pretending to be real?

    If someone contacts you claiming to be from a financial company, your first step should be to check they are authorised and regulated by the Financial Conduct Authority (FCA). To do this visit the FCA website and type in the company’s name. Clicking on the company name will reveal whether their current status is ‘Authorised’ or not. You should only speak with firms whose status shows as ‘Authorised’ on the FCA site. You can also check the credentials of the company by visiting their website or using the contact telephone number provided. In case you’re wondering, Portafina Investment Management Ltd’s FCA registration number is 754580.

  2. Is the company using unfamiliar language?

    Pensions are complex, and scammers may take advantage of this by using persuasive or jargon-filled language. If what a company is telling you is confusing, and they don’t explain what it means or what the scheme entails, it’s likely that they are a fraudster.

    Look out for these words and phrases:

    Pension liberation
    One-off investment
    Limited time offer

  3. Has the company of provider promised ‘guaranteed returns’?

    If something feels too good to be true it probably is. If a company or person tells you there will be a guaranteed return on an investment in a short timeframe, then this is a big signal that it’s a pension scam. Make sure you understand how your pension will be invested. A scammer may pressure you to transfer your pension into a single investment or offer a particularly high rate. The Pensions Advisory Service and Pension Wise offers further advice.

  4. Has the company or adviser said you can access your pension early?

    This is where a regulated adviser can help you understand what your pension options really are. You can access certain types of personal pensions from the age of 55. However, only in very specific circumstances will you be able to access your pension before you’re 55, such as serious illness.

    If you transfer your pension with a company who promises you pension access before you are 55, you could be hit with a big tax penalty and possibly lose your entire pension pot. A company or person advertising pre-55 pension release could be trying to scam you.

  5. Do you feel under pressure?

    If you’re being pressured into making a quick decision about your pension, it’s likely to be a scam. If you rush your decision, it could have a damaging effect on your plans for the future. Pensions are complicated and looking to do something with your pension is a big decision to make, so taking your time is essential. You should also remember not to reveal any personal information about yourself or details of your pension until you are certain.

A phone call out of the blue

On the 9th January 2019, new rules passed which mean that pension cold-callers could face fines of up to £500,000. While pension cold calls are now illegal, it doesn’t mean they’ll stop.

If you receive a call and the person on the phone has information about where your pension pot is held, or perhaps the company you work for, you should still be weary. It is fine to hang up the phone call. If you think the call could have been from a scammer you should report the call to the ICO.

To help you identify if the caller is a scammer you could ask the caller questions like:

  • What is your FCA registered number?
  • Can I call you back?
  • How long have you been a financial adviser/company?

If the company or adviser is legitimate, they shouldn’t mind you finding out more information about them and the product they are offering.

Trust the regulated specialists

Speaking to a pension specialist that is regulated by the FCA, like Portafina, ensures that you are protected when you use their services, giving you peace of mind.

And with your pension safeguarded, your future security will be better protected too.

“Making decisions involving your hard-earned pension is never a decision that should be taken lightly or rushed, and the fact that there are people actively trying to scam people out of their pensions shows that we should all be exercising extreme caution.

“If you do decide you want to make a change to your pension pot, make sure you’re speaking to someone who knows what they’re doing, can clearly explain your options to you and will give you the time you need to make the right decision. Most importantly, check that they are a regulated specialist by making use of the FCA register!”

Jamie Smith-Thompson

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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.