How to not fall victim to a Pension Scam

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June 27, 2022 - Furnley House

How to not fall victim to a Pension Scam

When the cost of living rises, many people turn to their savings and investments for security and start to question the returns their savings and pensions are providing.

Sadly wherever there is money, there is also the vulnerability of being the target of financial fraud. Online crime rose rapidly during the Covid pandemic and hasn’t slowed down since. The Pension Scams Industry Group estimates that up to 40,000 people lost money to pension scams in 2015-20. From 2021 the average pension fraud involved over £50,000 of savings, with losses ranging from less than £1,000 right up to a staggering £500,000. The victims of pension scams are unlikely to get their money back.

The growing problem of financial fraud is a real concern for everyone who works in the financial services industry. Citizens Advice recently held its Scams Awareness Month, which hopes to inform, educate and protect us all about the ongoing threat of pension scams, and many financial advisers are warning their own clients of the risks.

At Furnley House, our team of financial advisers have put together our own quick guide on how pension scams work. It includes tips on how to spot the warning signs of pension fraud and how to keep your pension savings safe from scammers.

What is pension fraud?

Pension fraud and scams are designed to deceive you into handing over your pension savings. There are two main ways you can be tricked into doing this: either by being persuaded into transferring your pension pot into a non-existent or high-risk investment scheme, or being conned into releasing cash from your pension.

Pension scammers are rarely amateurs, and often operate in sophisticated and highly organised ways. They can often appear to be likeable, trustworthy financial professionals and will lure people in with offers of better returns, one-off opportunities or early access to cash. These offers turn out to be untrue.

How do pension scams work?

Pension scammers are constantly changing and developing their approach to fraud in order to win the trust of their victims. This means that everyone is vulnerable to being targeted.

There are some familiar and common scamming techniques and it is good to be able to spot some of the signs:

  • The promise of ‘higher’ or ‘guaranteed’ returns. These can be through investments like overseas property and hotels, renewable energy bonds, forestry, parking or storage units.
  • Telling you that you can access your pension savings early through a loan or loophole. With this type of scam, you could be hit by a double blow: not only losing cash but facing a high tax bill if you access your pension plan before the current minimum age of 55.
  • Using online fraud techniques, such as ‘phishing’ to gain access to, and then steal from, your pension fund. ‘Phishing’ is when criminals use scam emails, text messages or phone calls to trick their victims. The aim is to make you visit a website, which may download a virus onto your computer, or steal bank details or other personal information.

You can be the target or victim of a financial scam at any age or stage of life. This can be whether you’re paying into a pension plan or taking money from one.

Pension scammers often prey on anxiety, for example promising higher returns to savers when inflation is rising or there is stock market volatility. Research for the Financial Conduct Authority (FCA) and the Pensions Regulator suggested that the more highly educated someone is, the more likely they are to fall for a pension fraud.

How to spot a pension scam

A pension scam can sometimes start with an out of the blue email, letter, direct message on social media or phone call. Pensions cold calling was banned in 2019 but scammers may still do it, and this is a good sign that something is wrong. The fraudster is likely to describe themselves as a pension adviser or pretend to represent a government agency, legitimate financial services firm or well-known personal finance expert. Scammers will also post ads online and use social media to lure people in and to make themselves look plausible.

The Pensions Regulator has published its own warning signs for people to look out for and these include:

  • Watching out for phrases like ‘free pension review’, ‘pension liberation’, ‘loan’, ‘savings advance’ or ‘cashback’.
  • Offers of guaranteed or high returns from unusual, unregulated or overseas investments, offering no consumer protection.
  • Help to release upfront cash from your pension before the age of 55.
  • Pressurised sales tactics that refer to opportunities being ‘time limited’ or ‘one off’.
  • Complicated investment structures that you don’t understand.

How to protect yourself

As well watching out for some of the phrases and offers that should put you on your guard, it is also useful to follow these three simple precautions against pension fraud.

  • Don’t be rushed into making a decision. When it comes pensions, there is rarely the need to have to make a quick decision. If you’re pressured into signing a document or taking action, there may be something wrong. Be particularly aware of this if you were initially contacted out of the blue by an email or cold call. Always take your time to do some research and get secondary advice.
  • Don’t believe what you are told. Scammers will give convincing answers to your questions or tell you about websites or phone numbers where you can check their information. Don’t trust these answers: do your own research online and don’t use the sources they suggest.
  • Check the FCA’s Financial Services Register. If the person you are dealing with or firm isn’t listed, then you won’t have access to the Financial Services Compensation Scheme or the Financial Ombudsman Service if you need help later down the line. If you want to make changes to your pension you can, but simply chose a registered adviser.

At Furnley House, our independent financial advisers are here to help guide you while you save for retirement right through to taking and managing your income later in life. Our office is based in Leicester and you can come and visit our advisers in person to discuss through your plans for the future. We are regulated by the FCA. To find out more about becoming a Furnley House client call 0116 269 6311 or email

If you suspect you’ve been approached by fraudsters, report it quickly to the FCA online or on 0800 111 6768. If you’ve lost money to investment fraud, you can report it to Action Fraud online or on 0300 123 2040.


Past performance is not a reliable indicator of future performance.

The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

All information correct at time of writing.