Since 6 April 2015 new pension flexibility has meant more choice about about how you access your pension than you did in the past. Unfortunately, these new rules mean new opportunities for fraudsters too.
What to look out for
We can’t tell you if the pension or investment you’re considering is fraudulent, but some key indicators that there may be a scam include:
- Promises of up-front loans or cash for transferring your funds and/or returns on your investment which seem unrealistic.
- ‘Once in a lifetime’ investment opportunities.
- Unexpected ‘cold calls’, particularly those who use high pressure sales tactics.
- An invitation to move to a non-UK based pension scheme (unless you’re planning to move or retire abroad and have sought this type of scheme).
- Reasonable or free transfer fees followed by extremely high annual fees.
- Offers that have the objective of releasing money or obtaining a higher tax-free amount before age 55 (unless the policyholder has retired on the grounds of ill health or has died).
- Some investment areas which seem to attract particularly high levels of fraud are: carbon credit, land banking schemes, new ecological opportunities, green oil from trees, precious earth metal schemes, boiler room share investment schemes, overseas property developments, storage pods.
How to protect yourself
There are some simple, easy steps you can take that will help protect you from fraudsters:
- Remember the old adage: if it seems too good to be true it probably is.
- Never give out financial personal information to a cold caller.
- Take your time – don’t be pressured into making a transfer you’ll later regret.
- Read the Pensions Regulator leaflet 'Scamproof your savings' for hints, checklists and case studies.
- If in doubt, don’t make any decisions until you’ve taken independent regulated advice from a regulated independent financial adviser (IFA). You can check whether advisers are regulated at www.fca.org.uk/register.
- Take time to look through any documents given to you and make sure you understand what you’re signing. Check whether any information about the company and any associated parties is available online.
- Carefully consider investment opportunities that are overseas and may therefore fall outside the regulation of the Financial Conduct Authority (FCA).
- Make sure you know the tax implications before you make the transfer. Some overseas schemes/Qualifying Recognised Overseas Pension Schemes may appear to offer an attractive return on your pension, but if you’re not abroad, or planning to move abroad permanently, very high (up to 55%) tax may be payable for each transfer that’s made. Many disreputable companies will mislead you into how much you’ll actually benefit.