4 red flags of pension-related scams to look out for – and how to protect yourself

Planning for retirement should give you peace of mind – but unfortunately, pension-related scams are becoming increasingly sophisticated, targeting savers of all ages and income levels.

The Financial Conduct Authority (FCA) said that around 800,000 people reported losing money to investments or pensions‑related scams in the 12 months to May 2024.

Fraudsters often disguise themselves as trusted advisers, official institutions, or legitimate investment opportunities, making it harder than ever to tell the difference between genuine guidance and a costly trap.

We spoke to Anthony Wilson, solicitor and managing director at Copious Law, who has represented many victims of pension fraud. He has highlighted what these scams often look like and the red flags to look out for.

What are some common types of pension-related scams?

“The victims all seem to have common origins in terms of how they’re actually contacted,” says Wilson. “The traditional ways these scams start is usually through some sort of unsolicited call, text or social media contact.”

The solicitor also highlighted that most pension-related scams seem to follow one of three following scenarios.

“A lot of people are either offered a free pension review, are persuaded to transfer funds into investments or are persuaded to release tax-free cash from their pension,” says Wilson.

A lot of these scams are very sophisticated.

“With the sophistication of social media and algorithms, the scammers can target advertising to a very specific group of people,” says Wilson. “So, you find that these people are really very, very clever at targeting the particular age groups that could be enticed into liberating their pensions.”

He also adds scammers often use intermediaries to seem more legitimate.

“Quite often what happens is that they use all sorts of intermediaries and the way they draft the documentation is exceptionally clever, so clients will believe that they’re actually dealing with a company that’s got some kind of relationship with the UK,” says Wilson. “Then when they find out their pension is gone, they can’t even make a claim to the lifeboat scheme in the United Kingdom, which is the financial services compensation scheme, because the scheme and company are often not covered by the Financial Conduct Authority.”

Who is usually targeted and why?

“In terms of target group, I think the average age of my clients over the years have been between 45 to about 65,” says Wilson. “A lot of the older group generally get caught by the scams that ask victims to take tax-free cash out of their pensions, because if you are over the age of 55 you’re entitled to take a certain percentage of your pension, in essence, tax-free.

“However, the younger individuals tend to be persuaded that the returns are going to be exceptional. These victims often get caught up in this idea that pension money is being “wasted” just sitting there doing nothing and the scammers convince them to transfer it into this self-invested personal pension plan.”

What some common red flags to look out for?

1. Unsolicited contact

“The internet is an ideal marketplace for people to operate all sorts of scams, and the traditional way these pension scams start is effectively through some sort of unsolicited social media contact, texts or phonecall,” notes Wilson.

2. Time pressure

Forcing you to act quickly is a common tactic.

“During the conversation there always seems to be a kind of time pressure,” highlights Wilson. “The scammer usually adopts a common sales tactic of a time-restricted offer and will say ‘this is time-limited’ or ‘I’m only available now so you need to get the documents done quickly because this opportunity will be closed soon’.”

3. Any investment opportunity out of the UK

“If it involves something to do with overseas, you need to be very, very wary,” warns Wilson. “Many scammers will try to convince you to invest in overseas property and the emphasis is based on taking you out of all of the restrictions that would apply in the United Kingdom.”

4. Downplaying the risks and losses

If it sounds too good to be true, it probably is.

“Scammers will often try to persuade you to transfer your pension funds into something much more lucrative,” highlights Wilson. “They will say it’s going to be far better for you, it’s going to make you more money and you will have more control over it.

“When people raise all sorts of issues and questions, the scammer often will downplay the risks and will play up the positives, rewards and the returns.”

How can people protect themselves?

Don’t respond

“If you get an unprompted text or social media message, the advice I’d give is to try not to entertain it and to not respond,” advises Wilson.

Be cautious

“Treat all calls with caution and never to assume they’re genuine,” recommends Wilson.”If someone is offering you a free pension review, ask yourself, what is in it for them? Why would they give me a free pension review? Remember that most things in life are not free.”

Try to not share personal information online

“There’s lots of data lists that seem to fly around these scammer companies, so they usually know a little bit about you,” says Wilson. “So, be aware with how much information you are putting out there and never give out your bank account or credit card details.”

Pause and reflect

“Try to not act quickly, [instead] pause and recalibrate,” advises Wilson. “If it’s a genuine situation, business or a pension company, they won’t mind at all if you want support or time think about it.”

Check the FCA website

“Check the FCA website to see if they are a legitimate company/business on the regulator’s various registers,” advises Wilson.

The FCA has also just launched a new firm checker tool on its website to check if a firm is authorised and has the correct permissions to provide services to help reduce people’s chances of falling victim to fraud.

In addition to checking if a financial services firm is authorised by the FCA for the services being offered, the FCA advises people to confirm that the contact details match those listed on the FCA firm checker.

What should you do if you have fallen for a pension scam?

“Always go to a regulator like the FCA first and see if you can identify whether the scammer’s company is a live entity or is in default and see if they are listed on the FCA’s registers,” recommends Wilson. “Then see if you can make you complaint through the various channels such as the Financial Ombudsman Service or the Pension Ombudsman Service and if you can’t, then seek legal advice.”