Pension scams prevention

Pension scams can be hard to spot, and you must protect yourself.

How to spot a pension scam

The Financial Conduct Authority (FCA) and Pensions Regulator suggest following four simple steps:

Step 1 - Reject unexpected offers

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

Step 2 - Check who you are dealing with

Check if anyone offering advice is authorised. Search Scamsmart and use the FCA register. If they are registered, check they can give pension advice. Contact the FCA. If you do not use an FCA authorised firm, you risk not having access to compensation schemes.

Step 3 – Do not be rushed or pressured

Take your time to make all the checks you need – even if this means turning down what seems to be a good deal.

Step 4 - Get impartial information or advice

You should consider seeking financial advice before changing your pension arrangements. If you want to transfer more than £30,000 from a defined benefit scheme to a defined contribution scheme that offers flexible access, you must obtain this advice.

The Local Government Pension Scheme (LGPS) is a defined benefit scheme.

Visit the Money and Pension Service (MaPS) website. They provide free independent and impartial information and guidance.

Find out about getting financial advice on the Money Helper website

If you suspect a pension scam

If you suspect a scam, report it. Report an unauthorised firm or scam to the FCA

Pension liberation

Pension liberation is a transfer of your pension rights to a pension arrangement that promises early access to your funds. These arrangements often incur substantial costs to you.

You are enticed with spam text messages, cold calls, or website promotions into transferring your pension rights. They promise you can release a portion as cash before the age of 55.

Accessing your pension before age 55 can result in an unauthorised payment. This can lead to significant tax charges and penalties. On top of the administrative fees, total charges can amount to more than half of the amount transferred.

Further help

Since the COVID-19 outbreak, there is market volatility and financial uncertainty. Members may be at risk of making sudden decisions about their pension. The Pension Regulator, Financial Conduct Authority and Money and Pensions Service jointly produced a warning letter for members of defined benefit schemes. Read the warning letter about transferring your pension

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