Warning - pension scams

Thinking of transferring your pension? Beware of scams

Your pension is one of your most important savings and unfortunately this attracts criminals who want to acquire your hard-earned savings. See how Pauline's life was affected in this video from The Pensions Regulator. 

Transfer warning

The LGPS is a defined benefit pension scheme. The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have stated that they:

"believe that it will be in most people's best interests to keep their defined benefit pension. If you transfer out of a defined benefit pension, you cannot reverse it. Make sure that you understand the risks to help you make an informed decision".

Scams are hard to spot with scammers producing credible websites, testimonials and materials which make them look like the real thing. Sometimes they imitate ("clone") the websites of well-known companies. 

Warning signs of scams

Watch out for the following scam tactics that indicate that your pension may be at risk:

  • a free pension review,
  • advise to move your pension overseas,
  • high investment returns,
  • pressure to transfer your pension quickly,
  • the promise of cash back from a transfer,  
  • access to pension under age 55 (it is illegal to access your pension before age 55 apart from on ill health grounds and can lead to high tax penalties)
  • contact out of the blue (pensions cold calling is illegal),
  • mention of tax loopholes,
  • promised returns which sound too good to be true, 
  • the contact details you are given are only mobile phone numbers or box addresses.
Things to check

To help you spot the signs and protect yourself from a scam, the Financial Conduct Authority (FCA) and Pensions Regulator suggest following four simple steps. 

Step 1 - Reject unexpected offers

If you're contacted out of the blue about a pension opportunity, chances are it's a scam. Pension cold calling is illegal, and you should be very wary. An offer of a free pension review from a firm you've not dealt with before, is probably a scam.

Step 2 - Check who you're dealing with

Search ScamSmart and check the FCA's register to make sure anyone offering you advice is authorised. If they are, check they're permitted to give pension advice by calling the FCA Consumer Helpline on 0800 111 6768.

If you don't use an FCA-authorised firm, you risk not having access to compensation schemes.

Step 3 - Don't be rushed or pressured

Take your time to make all the checks you need - even if this means turning down what seems to be an 'amazing deal' or researching a 'time-limited offer'. 

Step 4 - Get impartial information or advice

You should seriously consider seeking independent financial advice before changing your pension arrangements. In some cases, for example where you are wanting to transfer more than £30,000 from a DB scheme, you must obtain this advice.

Further checks before transferring

Before you agree to transfer your pension, you should:

  • Read the Pension Scams leaflet produced by The Pensions Regulator (TPR) and TPR's advice on scams: Avoid and report pension scams | The Pensions Regulator
  • Read the Pension Scams leaflet produced by the Financial Conduct Authority (FCA) and check their Pension scams page
  • Ask to see the new pension scheme's HM Revenue and Customs registration letter - a recent date of registration is a warning sign.
  • Ask for details of the new scheme's fee structure. Will you be paying high fees? Note that the LGPS does not charge for the day to day administration of your LGPS pension,
  • Contact Money Helper on 0800 011 3797. They are a government backed financial guidance service who give free independent and impartial information and guidance on workplace and personal pensions,
  • Do your own research - check on the internet. Search for complaints about the company you are considering. Check the web address looks correct - is it a "cloned" website of a reputable pension company. 
  • Beware any company offering cashback or high savings returns
  • Be ScamSmart with your pension. To check your proposed investment, visit www.fca.org.uk/scamsmart

If in any doubt, do not sign an agreement to transfer your pension.

Early pension release

Be very wary of any scheme offering to help you release cash from your pension before you're age 55. It's almost certainly a scam. 
Generally, you can only take money from your pension when your 55 or older except in certain cases, such as ill health. This will increase to age 57 from 2028. 

How early pension release scams work

Offers to access your pension early may be called 'pension liberation' or a 'pension loan', as the scammers often claim you can borrow money from your pension fund. 

If you take up the offer, your pension funds will be transferred to a scheme set up by the scam, frequently based abroad. 

You may be 'loaned' an amount (often around half of your pension), with the company involved taking a fee, perhaps as much as 30%.

You could also face a tax bill of 55% on what you withdraw, even if:

  • you didn't release you'd broken the tax rules, 
  • you put the money back in your pension
  • you've paid fees or charges to the company involved
  • you've spent all the money

Once you've paid the fees and tax, any money remaining will then be invested in high-risk products or projects, like overseas property development.

Sometimes it's simply stolen outright. 

Still want to transfer?

Please watch a short video explaining what you should consider before agreeing to a transfer: Videos

If you wish to transfer your pension, then see: Transfers out - deferred or Transfer out - active. 

Pensions Regulator pledge

We have self-certified to The Pensions Regulator that we meet the standards of the pledge: 

The Pensions Regulator Pledge

If you suspect a scam, report it

You can report an unauthorised firm or scam to the FCA using the online reporting form or on 0800 111 6768. 

If you suspect a scam, report it to Action Fraud on 0300 123 2040 or at www.action.fraud.police.uk.

Telephone scams

Pension Services advise the following:

  • Put the phone down on unsolicited telephone calls.
  • Never give personal or financial information to anyone who cold calls you on the telephone.
  • If you are unsure whether a caller is genuine, ring the company they claim to be from. Make sure that you find the number yourself and do not use a number provided by the caller.
  • Report any scams to Action Fraud online.
  • Help reduce unsolicited calls by registering with the Telephone Preference Service.

Note: Pension Services never request bank details from our members or pensioners over the phone.