Pension Scams — How to Spot and Avoid Them (UK Guide)

Pension scams have cost UK savers hundreds of millions of pounds. Knowing the warning signs can protect your retirement savings.

Warning Signs of a Pension Scam

Red Flags — Stop Immediately If You See These

Warning Sign	Why It’s Suspicious
Cold call about your pension	Illegal since 2019
Unsolicited text/email	Legitimate firms don’t approach this way
Pressure to decide quickly	Scammers don’t want you to research
Guaranteed high returns	No investment is risk-free
Access before 55	Usually illegal or massive tax penalty
Free pension review	Often lead-in to scam
Unusual investments	Overseas property, forestry, crypto schemes
One-off opportunity	Creates false urgency
Complicated structures	Designed to obscure what’s happening

The Most Common Tactics

Tactic	What Happens
Liberation scam	Promise early access (before 55), charge huge fees
Investment scam	Move your pension to fake/risky investments
Advance fee scam	Charge upfront fees, then disappear
Clone firm scam	Pretend to be legitimate company
Relationship building	Build trust over time before scamming

How Pension Scams Work

The Liberation Scam (Early Access)

1. Contact claims you can access pension before 55
2. You transfer your pension to their scheme
3. You receive small amount (maybe 50-70%)
4. They keep the rest as “fees”
5. HMRC taxes you 55% on unauthorized payment
6. You lose most or all of your pension

Example Loss:

Your Pension	£100,000
“Fee” taken by scammer	-£30,000
You receive	£70,000
HMRC tax (55%)	-£55,000
Your actual loss	£85,000

The Investment Scam

1. Offered “free pension review”
2. Advised to transfer to new scheme
3. Money invested in high-risk or fake assets
4. Investment fails or disappears
5. Scammers pocket fees and commissions
6. You have nothing at retirement

Clone Firm Scams

1. Scammers copy legitimate firm’s details
2. Contact you using their name
3. Slightly different phone number/email
4. You believe you’re dealing with real company
5. Send pension to scammer’s account
6. Real firm never received anything

Who’s at Risk

Higher Risk Groups

Group	Why Targeted
50-60 year olds	Larger pension pots, approaching retirement
Newly retired	May have large lump sums
Recently divorced	May have received pension share
Made redundant	May want to access pension
In financial difficulty	Tempted by “early access”

Regardless of Age

Anyone with a defined contribution pension can be targeted. Scammers buy data lists and contact thousands of people.

How to Protect Yourself

Step 1: Never Engage with Cold Calls

Action	Why
Hang up immediately	Don’t engage with possible scammers
Don’t press buttons	Can confirm your number is active
Don’t callback the number	May connect you to scammers
Report the call	Help stop others being targeted

Step 2: Verify Any Contact

Check	How
FCA Register	fca.org.uk/firms/financial-services-register
FCA Warning List	fca.org.uk/scamsmart
Companies House	Find registered company details
The Pensions Regulator	Check pension schemes

Important: Never use links in emails or texts. Search for the register directly.

Step 3: Be Skeptical of Promises

Claim	Reality
“Guaranteed 10%+ returns”	No legitimate investment guarantees this
“Risk-free”	All investments carry risk
“Early access no problem”	Illegal or heavily taxed
“Act now or miss out”	Pressure tactic
“Once in a lifetime”	Creating false urgency

Step 4: Take Your Time

Rule	Why
Sleep on it	Never decide immediately
Research thoroughly	Check independent reviews
Talk to someone	Discuss with family or friends
Contact your current provider	Get their perspective
Use Pension Wise	Free guidance for over 50s

Step 5: Get Proper Advice

Service	What They Offer
Pension Wise	Free, impartial guidance (over 50)
FCA-regulated adviser	Regulated financial advice
The Pensions Advisory Service	Free pension guidance
Citizens Advice	General money help

Checking If Something Is Legitimate

FCA Financial Services Register

Every legitimate UK financial services firm must be on this register.

How to check:

1. Go to register.fca.org.uk
2. Search firm name
3. Check address matches exactly
4. Check phone number matches
5. Verify what they’re authorized to do

Warning List

The FCA maintains a list of known scam firms: fca.org.uk/scamsmart

Contact Details Verification

Check	What to Look For
Phone number	Match exactly with FCA register
Email domain	Should match company website
Office address	Search independently, verify
Website	Check URL — slight misspellings are red flags

If You Think You’ve Been Scammed

Immediate Steps

Priority	Action
1	Stop any further payments/transfers
2	Contact your pension provider immediately
3	Report to Action Fraud (0300 123 2040)
4	Report to The Pensions Regulator
5	Contact FCA if firm claims to be authorized

Potential Recovery

Avenue	Details
Financial Ombudsman	If regulated firm was involved
FSCS	If regulated firm has failed
Legal action	Against individuals/firms involved
Pension Protection Fund	For some scheme failures

Reality: Recovering money from scams is difficult. Prevention is far better than cure.

Legal Protections

Pension Scams: The Law

Protection	Details
Cold calling ban (2019)	Pension cold calls illegal
FCA regulation	Firms must be authorized
Pension transfers	Provider must check for red flags
Statutory warning	Providers must give scam warnings

Transfer Red Flags Providers Must Check

Your pension provider may delay or refuse transfers if:

• Overseas transfer with poor fund reputation
• Unusual investment structure
• High-risk investments
• Overseas adviser
• Pressure to transfer quickly
• Dubious scheme registration

Questions to Ask

If approached about your pension, ask:

Question	Why
“What’s your FCA number?”	Check against register
“Where are you based?”	Verify address
“Can I have this in writing?”	Get documentation
“How are you paid?”	Understand conflicts
“What are all the fees?”	Scams hide fees
“Can I take a week to decide?”	Legitimate firms will agree

Key Contacts

Organization	Purpose	Contact
Action Fraud	Report scams	0300 123 2040
The Pensions Regulator	Report pension scams	thepensionsregulator.gov.uk
Pension Wise	Free guidance (50+)	0800 138 3944
Financial Ombudsman	Complaints	0800 023 4567
Citizens Advice	General help	citizensadvice.org.uk

Summary

Key Point	Remember
Cold calls are illegal	Hang up immediately
If it sounds too good…	It’s probably a scam
No early access	Before 55 is usually a scam
Verify everything	Check FCA register directly
Take your time	Never rush pension decisions
Use official guidance	Pension Wise is free and impartial
Report suspicions	Help protect others