Pension Advice

How to Spot Pension Scam Sharks

pension scam shark with brief case and suit

***Coronavirus Update***

Since the crisis began there’s been an increase in these types of scammers, which makes this information even more important. Make sure you’re vigilant and don’t be tempted by seemingly too-good-to-be-true offers from those trying to steal everything you’ve worked hard for. Take note of the tips in this article and don’t do anything without making sure it’s legitimate first. The FCA have a ScamSmart checker on their site that’s easy to use and lists companies to be wary of.

An increase in pension scams has meant some have lost more than £1m to pension scam sharks as they target the pensions, savings and investments of over 55s.

The average amount stolen from victims was £91,000, but some unfortunates have lost seven-figure pension pots to these criminals.

We reported at the beginning of 2019 on the Government’s introduction of a ban on pension cold calling, however there’s still people losing money to fraudsters.

They are very sophisticated and will try any tactic to persuade you to part with your money – from promising high returns on overseas investments to putting you under pressure to make a decision for a ‘limited deal’.

Here’s four scam shark tactics to be aware of:

  • BEFORE 55 – If they’re claiming to be able to give you access to your pension before you’re 55 ignore them, they’re undoubtedly a scammer as pension pots aren’t available before this age except in exceptional circumstances. So, look out for cold calls from people who say there’s a way you can access your pot early, they’re most likely someone you shouldn’t trust.
  • OVERSEAS INVESTING – If they’re claiming to be able to give you fantastic investment returns for overseas investments, you should be cautious. It’s important you only invest in things you understand, so investing in factories, businesses and biofuel in the Far East should be avoided. Regulated and legitimate pension, retirement and investment companies will only invest your money in regulated UK investments. A scammer will simply take your money and promise you things they can’t sustain, deliver or often have any intention of giving. So, look out for people claiming to be able to give you great returns for overseas investments.
  • COLD CALLING – If they call and you haven’t given them permission to do so by entering your details into a site that provides info on financial advisers, they’re cold calling, and this is illegal. However, this won’t stop scammers trying it and it’s been reported as the number one way scammers get in touch with victims. So, don’t trust anyone who calls without you giving them permission. Read more on cold calling in our article on who can and can’t call you.
  • GUARANTEED RETURNS – If they’re offering you guaranteed high returns of any kind, they’re scamming you and setting you up to lose money. There’s no such thing as a guaranteed return as investments go down as well as up. Be cautious of anyone guaranteeing returns on any kind of investment.

Ultimately, if you’re unsure and wondering what to do, only trust regulated pension and investment companies. You can find out which ones are authorised and regulated on the Financial Conduct Authority (FCA) website. The FCA are the UK’s financial service regulator and moderate all companies in the UK offering financial services to clients. This includes things like advising on pensions, savings and investments.

If you’re dealing with someone legitimate, they’ll only invest your money in things that are regulated and covered by the Financial Services Compensation Scheme, which protects against things like scams, fraud and bankruptcy.

Another reason to deal with an authorised company is you’ll be dealing with qualified financial advisers who know how to help you get the best from your money.

Think of it like going to the doctors, you would always want the medical professional treating you to be fully regulated and qualified – your financial adviser is the same. You need to make sure the person you’re dealing with will help you and isn’t just trying to steal your pension pots, savings and investments.

This is why you pay for regulated financial advice, you’re paying for the qualification, experience and regulation protection backing the firm. In the same way you pay for legal advice from a solicitor – a financial adviser is the financial service industry specialist, there to guide you through the minefield of pensions, investments and savings.

In summary

So, when dealing with someone you’re worried might be a scammer look out for them claiming unrealistic things like:

  • Giving you access to pensions before 55
  • High return investments in unregulated overseas companies
  • The promise of a guaranteed return
  • And be wary of anyone who’s cold called you
  • Make sure you visit the FCA site and see if the firm they’re from is regulated and authorised
  • And, don’t succumb to pressure tactics to make quick decisions

If you’d like to find out how to make the most of your money from a legitimate adviser, get in touch and we’ll help you avoid scams and make the best of what you have.

We’re authorised and regulated by the Financial Conduct Authority, holding the additional permissions to advise on Defined Benefit or final salary pension transfers.