Pension Scams
Keep Your Pension Safe
Pension scams are on the rise and fraudsters will do whatever it takes to get their hands on your savings. Scammers are always in operation however challenging financial situations or temptations of quick cash could lead people to consider risky deals.
What to Watch Out For
Being aware of the warning signs can protect you and your finances from ruin, these include:
- Cold calls, text messages or contact out of the blue with promises of quick cash, legal loopholes and pension loans
- Claims of accessing your pension before age 55
- Promises of high or guaranteed returns
- Free pension reviews
- Transfers of your money overseas
Many of the investments that scammers offer are unusual, high-risk investments such as forestry and parking lots which might ring alarm bells, but some could sound more appealing such as renewable energy bonds and overseas property. Regardless of the investment, all scams pose a threat.
Scammers can also be knowledgeable with credible testimonials and professional marketing materials, making it harder to identify a scam.
Consequences
If you transfer into a scam you run a real risk of losing a significant amount, if not all of your pension savings, as well as high commission or arrangement fees. This could mean the difference between having the retirement you have planned for or effectively losing all your retirement income and having to work longer than anticipated or rely on other sources of income.
Accessing your pension early is only allowed under very special circumstances such as ill health. If you transfer and access your pension before age 55, you will face significant tax penalties of up to 55% of the value of your pension.
This means you may end up receiving very little or none of your original investment and you could end up owing HMRC money.
The average victim loses £91,000.
Steps to Avoid Becoming a Victim
These 5 steps could help you avoid becoming a victim of a pension scammer:
- Never give your financial or personal information to a cold caller.
- Find out about the company's background. Any Financial Advisers should be registered with the Financial Conduct Authority (FCA).
- Ask for a statement showing how your pension will be paid at retirement, and question who will look after your money until then.
- Speak to an advisor who is not associated with the proposal you have received for unbiased advice.
- Never be rushed into a decision.
All pension savers should speak to an independent FCA-authorised adviser before making any transfers with their pension.
The FCA is the professional body which regulates firms and individuals that provide financial advice meaning it can provide details of authorised advisors.
Conditions for Transfers
Due to regulation changes we now must carry out specific checks before a transfer can be made. The Government has identified common pension scam risks which, if present, may suggest you are in danger of being scammed. These are called red and amber flags. If you wish to transfer out your pension, we must assess whether any red or amber flags are present. In order to make this assessment, we may request more information on your transfer. We will only ask for information that we reasonably need and will only use it for this purpose.
If there are any red flags present, we must refuse the transfer. If there are any amber flags present, the transfer will be paused until you attend a pension scams appointment with MoneyHelper. MoneyHelper offers free, impartial guidance backed by the Government on money and pension choices. The purpose of this appointment is to help you identify the risk involved with transfers, highlight the dangers of pension scams and help you consider whether you still wish to transfer.
More Information
To find out more about pension fraud and what to do if you think you have been targeted visit the Pensions Regulator's website, or visit the ScamSmart website for more information on how to protect yourself and to check pension or investment opportunities you've been offered.
A reminder that the Fund will never call members to ask for their bank details. If we have any questions about bank details we would email or write to you. Similarly we do not accept bank detail changes over the phone.
If someone calls claiming to be from the Pension Fund, ask for their name, hang up and then call our helpline 01224 045 045. We will be able to confirm any genuine enquiries.
Protecting Your Pension
The Fund has recently pledged to help combat pension scams by following the principles of the Pension Scams Industry Group (PSIG) Code of Good Practice. More information on this pledge can be found here.
Latest Updates
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The North East Scotland Pension Fund will publish the unaudited Annual Accounts for the financial year 2024/25 on 23 June 2025.
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With benefits ranging from a secure pension guaranteed by law, to different types of retirement options, your pension has been designed with you and your future in mind.
