Scam-fighting bodies have joined forces to warn pension scheme trustees and savers of a potential increased risk from scammers seeking to cash in on economic uncertainty.
The Pensions Regulator (TPR), Financial Conduct Authority (FCA) and the Money and Pensions Service (MaPS) today (Friday) issued the warning due to fears that recent headlines over squeezed household finances may leave savers more vulnerable to scammers.
The three bodies, all members of the Pension Scams Action Group – a multi-agency taskforce dedicated to keeping savers safe from scams – are concerned that fears over the economy, such as recent extreme movements in gilt yields, may prompt savers to incorrectly decide there is a risk to their retirement pots and make rushed decisions about their finances.
While the three organisations had not yet seen evidence of an increase in pension scams, they explained they wanted to act now given concern over cost of living increases and interest rate rises, which may make savers more likely to look for ways to shore up their finances. This may potentially leave them exposed to crooks set on exploiting their fears.
Nicola Parish, TPR’s Executive Director of Frontline Regulation and Pension Scams Action Group spokesperson, said: "Pension schemes are not at risk of collapse. It’s vital that savers who have seen recent headlines over the economy don’t panic and rush a decision over their retirement savings.
"Scammers exploit uncertainty. And savers’ worries about their finances may make them more vulnerable to fraudsters’ common tactics. Scammers may pose as people or organisations savers trust. They may contact savers out-of-the blue to make promises that appear too good to be true – because they are.
"We urge all savers to avoid hasty decisions and contact MoneyHelper for free, impartial guidance before taking any action. Savers can also find more information on how to spot the warning signs and check that they are dealing with a legitimate firm by visiting the FCA ScamSmart website."
Mark Steward, FCA’s Executive Director of Enforcement and Market Oversight, said: "The FCA urges anyone wanting pension advice to ensure they are dealing with an adviser authorised by the FCA on our register. Our ScamSmart website contains important information that will help you avoid scams as well as links to our register."
Charlotte Jackson, Head of Guidance Services and Customer Protection Strategy at MaPS, said: "We know that some savers may be worried about their pension pots. Scammers may try and take advantage of this uncertainty, so it’s important that you take the time to get free, impartial guidance from our pension specialists at MoneyHelper before making any major decisions.
"We will continue to work with the Pension Scams Action Group to protect consumers and signpost them to the information they need to make informed decisions."
Minister for Pensions, Laura Trott said: "We’re committed to arming savers with the tools they need to spot duplicitous fraudsters, who can be articulate, appear financially knowledgeable, and offer time-limited deals – all designed to convince people to hand over their hard-earned pension savings.
"As scammers’ crooked techniques evolve, so must our defences, and we continue to work closely with partners across industry, regulators and law enforcement to send scammers packing. Savers can also get on the front foot themselves – knowing the common signs of a pension scam is a great way to start."
Signs of a scam
Common signs of a pension scam include:
- being contacted out of the blue
- phrases like 'pension liberation', 'loan', 'loophole', 'savings advance', 'one-off investment', 'cashback'
- guarantees of better returns
- help to release cash from a pension before the age of 55, with no mention of the HMRC tax bill that can arise
- high-pressure sales tactics – time-limited offers to get the best deal; using couriers to send documents, who wait until they're signed
- unusual high-risk investments, which tend to be overseas, unregulated, with no consumer protections
- complicated investment structures
- fixed-term pension investments – which often mean people who transfer in do not realise something is wrong for several years
Savers should also be on guard against recovery room scams or secondary scamming – which sees fraudsters approach people who have already been scammed and offer to help them get their money back in return for a fee.
Nicola Parish added: "Anyone who receives an unexpected call about their pension – even if the call appears to come from a trustworthy organisation – should hang up. Reputable callers are unlikely to call out of the blue and they won’t ask for money upfront to pay for their services."
Pension scheme trustees have also been called on to remain vigilant to the risk of scams and suspicious transfer requests.
Trustees are asked to follow best practice in protecting savers from scams – including warning them of the heightened risk of pension and investment scams in times of uncertainty and providing some of the common signs of a scam.
Notes for editors
- Members of the public can get free guidance about their money and pensions via www.moneyhelper.org.uk or calling 0800 138 7777.
- The Pension Scams Action Group (PSAG), formerly known as Project Bloom, is a voluntary multi-agency taskforce to tackle pension scams. It co-ordinates and targets efforts to combat pension scams and fraud through education, prevention and enforcement. Its core strategy group members are The Pensions Regulator, Department for Work and Pensions, Financial Conduct Authority, Money and Pensions Service, National Economic Crime Centre and the Pension Scams Industry Group. Other partners are involved in supporting the group with communications, intelligence, operations and victim support.
- In November 2021, regulations arising from the Pension Schemes Act 2021 introduced a system of red and amber flags, giving trustees the power to refuse transfers where there's a heightened risk it may be part of a scam. Most pension transfers are legitimate and can proceed with minimum intervention. However, the Pension Scams Industry Group – a member of PSAG – estimates 5% of all transfer requests give trustees and scheme managers cause for concern.
- TPR published a statement for trustees and advisers of defined benefit and defined contribution schemes, setting out the main points it expected them to consider in managing investment and liquidity risks in light of current market conditions. It also warned that market volatility presents opportunities for scammers.
- The Pensions Regulator is the regulator of work-based pension schemes in the UK. Its statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).
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