Pension scams – don’t become their next victim!

Pension scams are still on the rise, it’s more important than ever to be aware of scammers trying to con you.

If you are considering transferring your benefits out of the Scheme check carefully that you’re not falling victim to a ‘Pension Scam’.

The DB Section Administrator is required to undertake several checks before it can approve a transfer and these checks are there to help protect you. The checks may change over time, as pension scams evolve, but are likely to include:

  • Checking that the receiving arrangement is registered with HMRC and is approved to receive pension savings. This check is designed to ensure you are not falling victim to a ‘Pension Scam’;
  • Checking that the company or individual who has advised you to transfer is duly authorised to do so (applicable to transfer values greater than £30,000); and
  • Confirming your identity.

New transfer regulations

At the end of last year, The Pensions Regulator (TPR) published new regulations, that will require the Trustee and administrators of pension schemes to, in some cases, do more checks on a transfer, to make sure it’s not a scam.

The regulations, arising from the Pension Schemes Act 2021, introduce 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.

Both the regulations and guidance were drafted with close co-operation between the Department for Work and Pensions (DWP), TPR, the Money and Pensions Service (MaPS) and the Pension Scams Industry Group (PSIG).

Most pension transfers are legitimate and can proceed with minimum intervention. However, PSIG estimates 5% of all transfer requests give trustees and scheme managers cause for concern.

Therefore, new conditions will apply on transfers out of the Scheme and the Trustee may not be allowed by law to proceed with your transfer (or you may be required to take further advice from the Government’s MoneyHelper service before the Trustee can implement your transfer request).

How to spot a scam

To help you spot the signs and protect yourself from a scam, the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) suggest following four simple steps:

Step 1 - Reject unexpected offers

If you’re contacted out of the blue about a pension opportunity, chances are it’s a scam. Pension cold calling is illegal, and you should be very wary. An offer of a free pension review, from a firm you’ve not dealt with before, is possibly a scam.

Step 2 - Don’t be rushed or pressured

Take your time to make all the checks you need — even if this means turning down what seems to be an ‘amazing deal’.

Step 3 - Get impartial information or advice

You should seriously consider seeking financial advice before changing your pension arrangements.

Step 4 - Check who you’re dealing with

Search ‘ScamSmart’ on the internet and you’ll find the page on the FCA website to help you avoid investment and pension scams. This interactive page will take you step by step through how to check an investment or pension opportunity.

You can also call the FCA Consumer Helpline on 0800 111 6768 for more help and support.

If you believe you may have been contacted about a scam you should call Action Fraud on 0300 123 2040.

If you don’t use an FCA authorised firm, you won’t be covered by the Financial Ombudsman Service, or the Financial Services Compensation Scheme, if things go wrong.